Types of Business Loans

Well, an auto loan is basically a loan that you take out in order to purchase a vehicle. With an auto loan, you are not paying on the depreciation of the vehicle like you do with a lease. You are paying on the vehicle purchase price plus interest.

A balloon loan is a type of loan that does not fully amortize over its term. Since it is not fully amortized, a balloon payment is required at the end of the term to repay the remaining principal balance of the loan.

Sometimes borrowing is necessary, but there is usually more than one option available for loans. Before borrowing from your retirement savings, you should determine that it's the best financial decision by considering the purpose, the cost and the future effect of the loan.

Small-business loans and credit cards remain the most popular sources of financing for business owners: 86% of applicants surveyed by the Federal Reserve sought a business loan or line of credit in 2016, while 31% applied for credit card financing, according to the Fed’s 2016 Small Business Credit Survey.

Business owners and managers should understand these differences before choosing whether to utilize a small business loan or a business line of credit to satisfy the financial needs of the business. There are advantages and disadvantages to each as well as differences in total costs.

Certificate of Deposit (CD) Secured Loans. A CD secured loan can be a valuable resource if you seek quick access to funds but would like to avoid tapping into your savings.

Equipment financing helps you purchase new business equipment right away. Use our free loan finder to access the industry's best equipment lenders.

Installment loans are available for many types of business purchases. A mortgage on a business building, for example, is a type of installment loan, as is a title loan on a business vehicle. Installment loans are often the best option for financing the purchase of a business asset, because the loan term can coincide with the life of the asset.

Interim financing, also called bridge financing or a bridge loan, is often used by a buyer who is selling a home to buy another, but the sale of the first home cannot be completed before the purchase of the second home must be completed.

Invoice factoring is a form of invoice financing that allows companies to sell their accounts receivable to improve their working capital. This financing provides the business with immediate funds that can be used to pay for company expenses.

A letter of credit (LOC) is a bank document that guarantees a payment. See how LOCs work, learn the lingo, and get examples of how they're used. A letter of credit (LOC) is a bank document that guarantees a payment.

Veteran-owned businesses can also seek help through the SBA’s Veterans Advantage lending program (VA business loans), which provides fee reductions on SBA loans. Under the VA business loan program, the SBA eliminates upfront fees for eligible borrowers on its signature 7(a) loans of $125,000 or less; reduces fees by 50% on 7(a) loans of between $150,001 and $350,000; and eliminates fees on SBA Express, or fast turnaround, loans of between $150,001 and $350,000.

A merchant cash advance allows a business owner who accepts credit card payments or has other payment or receivables streams to obtain an advance of the funds regularly flowing through the business’ merchant account.

A mortgage loan, or simply mortgage, is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged.

Function. A business loan is borrowed capital that companies apply toward expenses that they are unable to pay for themselves. Some business owners use business loans to pay for salaries and wages until their new company gets off the ground, while other companies put borrowed funds toward office supplies, inventory or business projects.

Depending on your state law, payday loans may be available through storefront payday lenders or online. Some common features of a payday loan: The loans are for small amounts, and many states set a limit on payday loan size. $500 is a common loan limit although limits range above and below this amount.

Turn to Prosper for access to unsecured loans at great rates. You won’t need to put up any collateral or refinance your home to get the funds you need. Personal loans for small business use are issued to you as an individual, and are dependent on your good credit. Because of this, Prosper can be great help for a new small business.

Small Business Administration (SBA) financing. Bank of America financing guaranteed by the SBA may be right for your business. SBA 504 (suitable for commercial real estate loans of $350,000 and above), SBA 7A and SBA Express programs generally provide you with lower down payments and longer financing terms.

There are two basic categories that most loan types fall into – Secured and Unsecured. Secured Loan. Secured loans are those loans that are protected by an asset or collateral of some sort. The item purchased, such as a home or a car, can be used as collateral, and a lien is placed on such item.

Short-term business loans offer cash to bridge cash-flow gaps, handle emergencies and unexpected expenses, or take advantage of a business opportunity. Here is NerdWallet's guide to short-term financing offered by online lenders.

The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business. We support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business.

A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses.

With long terms and low rates, term loans are some of the best business loans on the market. Use our free loan finder to apply to term loans in minutes.

An unsecured loan is a loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral. Because unsecured loans, sometimes referred to as signature loans or personal loans, are obtained without the use of property as collateral, the terms of such loans, including approval and receipt, are most often contingent on the borrower's credit score. Borrowers must generally have high credit ratings to be approved for certain unsecured loans.

Well, an auto loan is basically a loan that you take out in order to purchase a vehicle. With an auto loan, you are not paying on the depreciation of the vehicle like you do with a lease. You are paying on the vehicle purchase price plus interest.