Finances are at the heart of any business, whether you’re a B2B service-based business with thousands of employees, or a tiny eCommerce startup operating out of a garage. When you’re looking to make big purchases or expand to a new location, however, you may find that you just don’t have enough capital to do so. Don’t worry—this is normal. There comes a point in every business’ existence when it’s wise to acquire funding in order to expand your operations so that your business can continue to grow. And while there’s a wide range of financing options out there, one of the most common is a corporate loan.
These are a few of the types of loans which might be available for your business, and a few of the pros and cons of each:
A commercial loan is designed to assist businesses with short-term funding needs. This can be used to fund major capital expenditures like equipment purchases, production supplies, or sometimes even payroll. These loans usually require collateral, so they may not be suitable for a younger business that may not be able to provide collateral or even proof of adequate cash flow. In that case, an unsecured loan or a line of credit might be better. If your business has been around long enough to prove cash flow, however, but still isn’t large enough to take advantage of bond and equity markets, a commercial loan might be a good option.
Real Estate Loan
If your business would be better off owning space to operate in, instead of renting, a real estate loan can help you buy a property. Essentially, this is considered a corporate mortgage, and function similarly to individual mortgages, but the business often has the flexibility to pursue construction, development, or other additional loans as well. This type of loan can also be used to buy land, which is something for agricultural-type businesses to keep in mind.
Ready to buy another business? An acquisition loan can help you do things like purchase an existing business, finance the purchase of a franchise, or even buy out a partner in a business you already own. You’ll need to be able to provide documentation that both demonstrates your own credit and reliability as a borrower, and your ability to run a business if you don’t already operate one. If you’re purchasing a franchise, you may have additional financing options available to you.
Haven’t started your business yet, and lack the capital to do so? A venture loan may be able to help you get the ball rolling. While these loans often have significant collateral requirements and are considered high risk, they enable you to finance the business of your dreams. It’s important to be aware, however, that there are many regulations surrounding startup funding, so it’s important to seek out expert advice before making a move.
These are just a few of the wide range of loans available to growing businesses. Whether your needs are short-term, long-term, cash flow, or unsecured, the options are nearly infinite—so the only limit is the needs of your business. Not sure which loan your business needs? Every situation is different. Experienced legal counsel can help you take a closer look at your business’ needs, goals, and financial status, and help determine which type of corporate loan might be right for you.