What is the Most Common Form of Small Business Financing?


Depending on the type of business you have, there are a number of small business funding options available. These include equity funding, business loans, and even crowdfunding. However, which one is best for you depends on the size of your business, your personal financial situation, and your business needs.

The best small business financing option will meet your business’ needs while also being affordable. This means weighing several different financing options to find the right one.

Term loans are one of the most common forms of small business funding. These loans provide a lump sum of cash to purchase equipment or other business expenses. A term loan’s repayment term can range from one to several years. The best part is that term loans usually come with a low interest rate.

Term loans are not for the faint of heart, however. Lenders will scrutinize your business’ bank statements to see if you have the revenue to support your monthly payments. Some lenders will also require your business’ tax returns.

A business line of credit is a great option for companies with a seasonal capital needs. It works much like a credit card, but only charges interest on money you actually take out of the line of credit.

A business cash advance is also a good option for small businesses. Unlike a term loan, a business cash advance will be paid back directly from your sales. However, this type of financing can be a bit more expensive than a term loan.

Facebook Comments Box