Small business loans can be great when you need to get your brand up and running or cover unexpected expenses. However, it’s useful to understand the difference between the available options before committing to one.
To help you make the right choice, here’s what you need to know about some of the more commonly used business loans.
LINE OF CREDIT / OVERDRAFT FACILITY
A line of credit involves overdrawing on your business’s bank account up to an amount approved by your financial institution. This is commonly used for short-term capital, or as a source of cash flow to keep operations running smoothly.
BANK TERM LOAN (SECURED OR UNSECURED)
A bank term loan is a medium-to-long-term loan option commonly used for purchasing equipment or covering business start-up costs. It involves borrowing form a lender and making regular repayments over an agreed period.
A mortgage loan can be used to cover most of the upfront costs of purchasing a property for your business. The property is then used as collateral by your lender until you’re able to repay the loan amount and the incurred interest.
Used primarily for equipment and vehicle purchases, lease financing means the lender owns the asset and charges the business a hire fee. At the end of the lease agreement, the business may be able to refinance or purchase the asset.
Looking for the right business loan?
Understanding how the different commercial loans vary can help you choose one that best suits your business needs. Make sure you speak with our professional commercial specialists before making any decisions to ensure your business gets the right level of financial support.