Have you ever thought about the fact that most of the people who are going for a loan are either having low credit score or they don’t have any job? Well, in this article, we are going to discuss the different types of loans and how it works.
Before we start talking about the loans, let’s understand what is a business loan? A business loan is a loan that is taken by the business person and it is used for the expansion of his business. There are two types of business loans which are short-term business loans and long-term business loans.
Short-Term Business Loans
These loans are taken for a specific period of time, and the repayment of these loans will be done within a year. The most common types of short-term business loans are SBA loans, SBA 7A loans, and SBA 7A+ loans.
SBA loans:
SBA loans are given by the Small Business Administration (SBA). It is a government agency that provides financial assistance to small businesses.
SBA 7A loans:
These are also known as the SBA 7A loans. They are given to the small businesses that have been in operation for a minimum of 7 years.
SBA 7A+ loans:
These are also known as the SBA 7A+ loans. They are given to the small businesses that have been in operation for a minimum of 7 years and have a positive balance sheet.
Long-Term Business Loans
Long-term business loans are taken for a period of 10 years or more. The repayment of these loans will be done after the time of the business expansion. The most common types of long-term business loans are the lines of credit, term loans, and revolving loans.
Lines of credit:
These are the most common types of long-term business loans. These are usually taken by the businesses that have been in operation for a longer time.
Term loans:
These are also known as the term loans. They are taken by the businesses that need to expand their business in a short period of time.
Revolving loans:
These are also known as the revolving loans. They are taken by the small businesses that want to expand their business in a faster way.
Conclusion:
We have discussed the different types of business loans and how they work. If you are having any doubt about your loan, then you can contact us at bajpaymentsor you can also ask for our free consultation.