Small Business Loans: Qualification and Benefits
If you’re starting a new business, a small business loan can help you get started by providing working capital to build a store, buy inventory, or promote your business. But how does a small business loan benefit you in real terms, and do you even qualify for a loan?
What is a Small Business Loan?
By definition, a small business loan is a certain amount of money that is borrowed by a person who wants to start or operate his or her own business. It is basically a type of personal loan given by lenders to small business owners.
There are several types of small business loans. Unsecured business loans are issued by a lender based on your credit alone without any sort of collateral. Usually, you will need a high credit score and a very good credit history as well as have a stable personal finance situation.
There is also business financing that can be based on collateral such as real estate collateral, a vehicle or property that is free and clear of debt, and so forth. Then, there is a commercial real estate finance loan for which money is granted for a commercial property that is to be used for business. There is also a business line of credit, which is a fixed, predetermined amount of credit that a company can borrow against as needs arise. The borrower will only be required to pay interest on the amount used.
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