Different types of Business Loans in USA - PowerPoint PPT Presentation

View by Category
About This Presentation

Different types of Business Loans in USA


Are you confused over Business loan types? Here, we will let you go through the varied types of business loans. After all, we want you to make the right decision. – PowerPoint PPT presentation

Number of Views:10
Date added: 18 June 2019
Slides: 19
Provided by: kpulak
Category: Other


Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Different types of Business Loans in USA

Different types of Business Loans in USA
Bank Term Loans
  • Banks issue bank terms loans for a specific
    amount, and have long-term repayment plans.
  • These loans have both fixed and floating interest
  • A term loan is appropriate for small business
    owners with sound financial statement, and the
    ability to repay over a specified repayment
  • Terms loans are usually used to purchase
    equipment and fulfill working capital needs.  

Types of term loans
  • Reflecting the lifespan of a loan, term loans
    have several varieties
  • Short-term loan Offered for a short period -
    less than a year, and is paid in weekly or
    monthly installments, through a loan that runs up
    to 18 months can be referred as a short-term
  • Intermediate-term loan The loan runs typically
    between one to three years and paid in monthly
  • Long-term loans Long-term loans last for three
    to 25 years, but may last for 30 years in some
    cases. The long term loan requires monthly or
    quarterly payments from the companys profits.

Bank Line of Credit
  • A line of credit is an unsecured loan that a
    customer can borrow from a financial institution
    usually a bank - and use for any purpose, as
  • Customer will need a good credit score, typically
    credit score of 680 or higher, and have a decent
    history of repaying debts promptly.
  • Line of Credit (LOC) may be cheaper than a credit
    card advance and more flexible than a personal
  • LOC can be the best help when you need money
  • It can be used for home renovation projects, for
    a great vacation, medical bills, big-ticket
    purchase, childs fees.

How does LOC work?
  • You can access funds from the line of credit,
    whenever you need.
  • In the line of credit, unlike a loan, you dont
    have to get a lump sum amount upfront.
  • You have variable access to a line of credit as
    long as you dont exceed credit limit or maximum
    amount as you need it.
  • Accessible through electronic transfer and checks.

Equipment Loans
  • Issued to purchase business equipment.
  • The best financing option to help small
    businesses get the capital to acquire, replace,
    repair, and upgrade various types of machinery to
    produce, manufacture process their products.
  • Used to buy
  • medical and dental machinery for hospitals
  • cookware, oven, table and chair, and other
    catering supplies for restaurants
  • monitor, printer, scanner for offices
  • specialized machinery, furniture, a vehicle for
    transportation, etc. for efficient and productive
  • One can pay 100 of the cost of the equipment
    used for his/her business.
  • Depends on the total value of the equipment you
    are purchasing.

Invoice Financing
  • Invoice financing allows you to borrow money
    against unpaid invoices i.e., against the amount
    due from customers.
  • Lenders provide companies with cash
    collateralized by accounts receivable.
  • Can get up to 85 of the value of your invoice.
  • A great way to invest capital into your business
    when customers are taking a long time to pay the
  • Helps to improve cash flow, paying employees and
    suppliers, and covering other expenses.
  • There is less risk involved in invoice financing
    from a lenders perspective.
  • Unlike a line of credit which may be unsecured,
    invoices act as collateral for invoice financing.
  • Although it doesnt eliminate all risk, customer
    may not pay the bill. 

Purchase Order Financing
  • Financial assistance for businesses that lack the
    cash flow to complete customer orders.
  • Many small businesses have cash flow problem to
    complete a purchase order, and thats why it is
    needed the most.
  • Pays the supplier of your company to deliver
    goods to the customers.
  • When the customers pay purchase order financing
    company then makes money by charging your company
    various fees.
  • Deducts its fees from collected invoice and
    returns the remaining amount to you.
  • If you have a new business and get large orders
    at once, you might not have money to deliver
    these orders to your customers.
  • Makes sure you have enough fund to fulfill the

Rollover for Business Start-ups
  • A rollover for business startups allows you to
    use funds from your retirement account to invest
    in your business.
  • With rollover for a business startup (ROBS), you
    dont pay early withdrawal penalty or taxes.
  • A ROBS is neither a business loan nor a 401(k)
    loan, so there is no debt or interest to repay.

How rollover for business works?
  • ROBS gives you access to your retirement funds to
    use it to fund
  • a new business
  • buy an existing business
  • recapitalize your business without having to
    borrow or cash it.
  • A ROBS is not a withdrawal from or a loan against
    your retirement fund.
  • When you use it, your retirement account buys a
    share of your business.

Hard Money Loans
  • A hard money loan is a specific type of
    asset-based loan option for real estate investors
    when they cant get a loan from a traditional
    mortgage lender.
  • A hard asset and collateral secure a hard money
  • Many new businesses are turning to hard money
    loan because they are easier to achieve than
    traditional loans.
  • Expensive and hard to pay.

How hard money loans work?
  • Issued for a short term typically 6 to 24
  • You can close it as soon as you can.
  • Allows real estate developer and investor to
    purchase new properties and do more transactions
    with less money, which will get them a higher

Non-Profit Business Loan
  • These lenders cater to small business in their
    community that can potentially impact the economy
    by creating jobs.
  • Non-profit lenders often offer to business owners
    unable to access capital from traditional lenders
    for nominal interest rates.
  • Their objective is to support the economic
    development of the community.
  • Non-profit lenders develop a strong relationship
    with small business owners they lend to.
  • They help borrowers navigate particular
    challenges and provide them fund before it is too

Advantage of Short-term Loans
  • Shorter time for incurring interest
  • Quick funding time
  • Easier to acquire

Merchant Cash Advance
  • A merchant cash advance is a cash advance but
    operates like a loan.
  • It is a lump sum payment that a finance company
    provides you in exchange for a percentage of your
    credit card and/or debit card sales.
  • Merchant cash advances (MCA) are approved quickly
    and easily with no collateral, even if you dont
    have a good credit score.
  • Have higher fees than traditional loans.
  • Merchant advance companies are not bound by usury
    law and operate in mostly unregulated market.
  • MCA can help with inventory purchase, debt
    payments, working capital, and other unexpected

Online Business Lines of Credit
  • A business line of credit is like a small
    business credit card.
  • It gives you access to a credit limit when you
    need capital.
  • Unlike a traditional business loan, you have
    variable access to a business line of credit as
    long as you dont access the limit.
  • You can access the fund as per your need and
    repay the only amount you get, plus the interest
  • You can draw on a business line of credit to
    tackle cash flow gap, get more working capital,
    and other unexpected payment.     
  • With a business line of credit, you can typically
    borrow from 10,00 to over 1 million in funding.
  • Repayment term generally ranges between 6 months
    to 5 years, depending on your credit worthiness,
    for 7 to 25 interest rate.

Benefits of a Business Line of Credit (BLOC)
  • Poor credit is acceptable
  • Only pay interest on fund accessed
  • Suitable for a wide range of business purposes

Thank You !!!
About PowerShow.com