Starting your own small business from an idea that you’ve grown, researched and brought to life can be incredibly rewarding, but of course, there are also challenges that you’ll face that can make this more difficult – one of the main issues is funding. But don’t worry, there is a range of loans for small businesses that can help you build your business from the ground up so you can achieve your goals. Read on to find out more about these loans and how businesses can benefit. 

Types of business loans 

When trying to find a business loan to suit your requirements, there is a range of options you can choose from, including: 

• Term loans: These loans are the most traditional type of business loan. Your business borrows money from a bank or online lender, and then you repay the lender as set out by the terms and conditions. They offer a range of loan amounts and repayment terms to suit your business and can be used for a variety of purposes. 
• Short-term loans: These loans are typically used as a way of dealing with emergencies. They can be used by businesses that have bad credit as they offer more lenient approval requirements. They tend to have a shorter repayment period than term loans, with lenders asking for repayment in under 3 years. 
• Lines of credit: This type of finance allows businesses to borrow money as and when needed, not dissimilar to a credit card. The business will be issued with a credit limit, and a draw period to suit them. 
• Equipment Financing: Purchasing the equipment you need for your business to run smoothly can be costly, and many business owners won’t have the funds to pay for it outright. An equipment loan allows businesses to benefit from the tech or tools they need to enhance productivity and profitability, whilst paying it off in more affordable chunks. 

What are the benefits? 

So, with various options to utilise when it comes to funding your business to get you where you want to be, you might be wondering – what are the benefits? Here are some of the advantages that come with using business loans. 

Access to capital 

One of the most obvious benefits that come with choosing one of the many loans available  for your business is that you will have access to capital to invest in your company. As a small, up-and-coming business, or entrepreneur, it’s likely you’ll not have an endless stream of your own money to keep investing in your growth. Choosing a business loan to suit you means you can focus on growing profitable areas of your company to make it a success. 

Increased cash flow 

Cash flow keeps your business ticking over and refers to the amount you have coming in to pay for inventory and other expenses. As a small business, cash flow may be tight while you find your feet. Choosing a loan, like a line of credit or cash advance, or exploring the options of open banking or a revenue based loan, can help improve your cash flow when you may be struggling to make ends meet. This can be especially helpful when it comes to sustaining and eventually growing your business.

Build credit 

Did you know that applying for small business loans can be a great way to build credit? If you’re an entrepreneur that’s just launched a business, you won’t have a business credit score just yet. But applying for loans to help you, that you can afford to pay back means you can begin to build a strong payment history, resulting in a good business credit score. This means you’ll be more likely to be approved for additional finance in the future should you need it. 

Growth and success 

You need funds to grow your business, hire and train new staff, expand into new premises, and diversify your products. Choosing a business loan to help you, whether that’s in the form of a term loan, or an equipment loan can help you achieve your goals and propel your business to success. As soon as you take the leap to run a business, you’ll be thinking about how you can grow and reach your full potential. Various types of business funding are there to help you accomplish your goals.