Types of Online Business Loans You Should Be Aware Of
In any business venture, there will come a time when you will need additional funding to help develop the growing needs of your company. The need normally comes a time when the business is starting to attract more clienteles but the cash available for the business will not suffice the growing demands of the customer.
The solution therefore is to apply for business loans that would help ease the business expense on inventory goods and operating cost. Any type of loans in the financial market today varies but all of them are advantageous to all types of businesses.
However there are some money lender packages that are specifically intended for small and medium size businesses.
Aside from the very popular line-of-credit loan offered by many lending companies, there are other kinds of loan that a business owner can avail of. There is the installment loan where the repayment scheme is to pay back the loan including the interest in equal monthly payments. The number of installment payment will depend on the agreement between the money lender and borrower. Installment loans allow the borrower to get in full the amount he applied for and its interest calculated the acceptance date of the check to the final date of payment.
In most cases, this type of loan normally falls under the short term and small personal loan category. The loan is short term because repayment is usually finished within a year and the amount involved not unusually big. The loan can also be pre-terminated by the borrower by paying the remaining principal amount before the final due date and there is usually no penalty in doing this. In fact, if the borrower prefers to terminate the loan before its due date appropriate adjustment is done on the remaining interest to be paid.
A Balloon loan is another way to go. Balloon loans offered by a loan company are usually written under another name but you will be able to recognize once the full amount is received after the contract is signed and only the interest is paid off during the life of the loan.
The principal amount is paid only on the final due date of the loan. In rare instances, a loan company will offer loans whose interest and principal amount is to be paid simultaneously on the loan’s maturity date. Another type of loan usually availed by large companies and multinationals is the Letter of Credit or more commonly known as “LC”.
This is normally used for transacting business with companies outside of the country. This is a type of a bank loan that will allow entrepreneurs to guarantee payment to suppliers and other business entities outside the home country of the borrower.
Other types of business loans that would be of great help to business industry are short and long term loans, second mortgages where real estate is used to secure a loan, inventory and equipment loans, Account receivable loans where the loan is secured by the businesses outstanding accounts, personal or character loans, guaranteed loans where the loan is secured by a third party and commercial loans usually offered by commercial banks and other commercial lending companies.