When you ask a lender “What types of business loans do you offer?”, you’re trying to find out which financing options match your business’s needs, repayment ability, and growth plans.
Here are the common types of business loans lenders might offer:
1. Term Loans
- Lump sum of money repaid over a fixed period with interest.
- Good for: Expanding operations, buying equipment, or large investments.
2. Business Lines of Credit
- Flexible access to funds you can draw from when needed, paying interest only on what you use.
- Good for: Managing cash flow or unexpected expenses.
3. SBA Loans (U.S. only)
- Government-backed loans with lower interest rates and longer repayment terms.
- Good for: Startups or small businesses that might not qualify for traditional loans.
4. Equipment Financing
- Loan specifically for purchasing business equipment, with the equipment often serving as collateral.
- Good for: Machinery, vehicles, or tech upgrades.
5. Invoice Financing (or Factoring)
- Borrowing against unpaid customer invoices to improve cash flow.
- Good for: Businesses with slow-paying clients.
6. Merchant Cash Advances
- Advance on future sales, repaid via a percentage of daily credit/debit card sales.
- Good for: Businesses with high card transaction volume but weaker credit.
7. Commercial Real Estate Loans
- For purchasing, renovating, or refinancing business property.
- Good for: Long-term property investments.
💡 Why asking this question matters:
It helps you compare lenders, see if they specialize in your industry, and avoid being pushed into a loan type that doesn’t fit your situation.
If you’d like, I can create a side-by-side chart showing each loan type, how it works, its pros & cons, and typical requirements so you can choose the right one faster.
Understanding the different loan products available is critical because each type of loan serves a specific purpose and has unique features. For example:
- Term Loans: These provide a lump sum of money that you repay over a fixed period with a set interest rate. They are ideal for large, one-time investments such as purchasing equipment or expanding facilities.
- Lines of Credit: These offer flexible access to funds up to a certain limit, which you can draw from as needed and only pay interest on the amount used. This option is useful for managing cash flow or covering unexpected expenses.
- Equipment Financing: This is specifically designed for purchasing business equipment, where the equipment itself serves as collateral, often resulting in lower interest rates.
- SBA Loans: Backed by the Small Business Administration, these loans often have favorable terms and lower interest rates but require more documentation and a longer approval process.
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