Seven Top Loans That Can Be Used by Entrepreneurs

If you are an entrepreneur, you have a greater need for cash than when you are employed in a regular company. Therefore, you need to be creative when it comes to getting cash for your business. This may involve directing your sights on funding, such as pawn loans, title loans, or similar offerings. The following listing gives you more insight into these entrepreneurial loans – loans that are both unique and varied.

lending for entrepreneurship
Shutterstock Licensed Photo – By fizkes

1. Title Loans

Title loans can be used by entrepreneurs who have poorer credit scores, as their vehicle can be used as collateral. If you do not repay the loan, the lender has a right to take your car. You can get these loans easily, and do not have to worry about getting bank approval. If you need money for a business emergency, you may want to consider this type of financing.

You just need to be at least 18 years old, possess a title to a vehicle, and show that you can pay back the loan. This type of loan is easier to get because you do have some form of collateral in your possession. If you have taken out another loan for your business, but run into an emergency, you may want to consider this option.

2. Pawn Loans

If you have anything of value, such as fine jewellery or electronics, you may want to consider taking out a pawn loan. Again, like title loans, pawn loans are collateralized loans, so they are pretty easy to get. You will need to provide a picture ID and be at least 18 years of age. If you cannot repay the loan, the item you use for collateral will be placed for sale.

3. Term Loans

A term loan is an ideal choice if you need a source of ongoing working capital. You do not need this loan for an emergency, like title loans or pawn loans. Most people use a term loan to plan a business expansion, invest or remodel a commercial space, or obtain another business. It is also used when purchasing real estate.

4. Business Lines of Credit

If you want a financial cushion for gaps in your business’s cash flow, this is the loan to choose. Do not use this type of financing for long-term business investments or goals. For example, this type of loan can be used to cover a financial drought or tide things over while you are waiting to get paid.

5. Equipment Financing

If you need to lease or buy business equipment, machines or vehicles, you want to consider this type of loan. However, don’t take out the financing if you don’t have an immediate need.

6. Invoice Financing

If you have problems with unpaid invoices, you should think about applying for invoice financing. This type of funding is ideal if you are a B2B company. Don’t apply for a loan if you are set up as a B2C company.

This loan works by making advances of the percentage of your invoice amounts – usually about 85%. You can use the money to cover your rent and other business operating expenses. This can be done while you wait on payment.

While you are waiting for payment, the lender will assess a weekly fee. Once the customer pays what he or she owes, the lender returns the remaining 15% of the 85% advance.

7. Commercial Real Estate Loans

If you wish to buy a shop, office space, or building, you can take out a commercial real estate loan. This niche-specific loan can take on different forms, depending on your real estate purchase. If you go through a bank, your loan term will be longer and you will pay back a lower interest rate.

On the other hand, hard money lenders, such as private lending companies, typically provide balloon loans. A balloon loan is designed so the borrower makes smaller payments for several years and a large balloon payment at the end of the term. If the borrower cannot afford the balloon payment, he or she normally renegotiates the loan’s terms or refinances the debt.

The amount you receive for a commercial real estate loan depends on the loan-to-value (LTV) factor. The LTV compares the amount of the loan with the worth of the commercial property. For instance, if you buy a building that is worth $100,00, you might obtain a maximum loan amount of $75,000, but have to provide $25,000 as a down payment.