A Complete Guide for Entrepreneurs about Different Types of Business Loans in Bedford, TX
Business expansion is important if you want to tap new opportunities as well as market segments and cater to more customers. And for that, you need access to capital and funds which you can invest in your business. Though there are many ways to fund your business, the most popular one is taking out business loans in Bedford, TX. Loans are more popular among entrepreneurs because:
- There is less input from investors on how to use those funds to run your business
- Loans have tax deductible interest payments
As per the United States Small Business Administration, in the year 2013, small business lending increased by approximately 10.4 percent. And this figure has soared over the years. The purpose of sharing this piece of information is that lenders are willing to offer business loans in Bedford, TX to start-ups and small business owners.
If you too, are in need of funding and want to secure capital, then now is a good time to apply for a loan. However, first, it’s important that you develop a good understanding of the different types of business loans in Bedford, TX so that you can select the best loan option that suits your business needs.
§ SBA Loans
Guaranteed by the SBA, these business loans in Bedford, TX are offered by the banks and sometimes even by other lenders. Repayment term on these loans primarily depend on the way the borrower plans to use the funds. For example, for working capital, the repayment period is 7 years. Meanwhile, repayment period is of 10 years if the funds are used for buying business equipment and for real estate buying, the repayment period is 25 years.
Some of the top benefits of taking out SBA loans are that they have low rates, the borrowing amount is up to 5 million dollars and the repayment terms are long. This loan type is best for those business owners who are either looking for expansion or want to refinance their existing debts.
However, qualifying for SBA business loans in Bedford, TX is not easy as the application and approval process is both lengthy and very rigorous. And this is exactly why it is important to seek assistance from a professional business broker as they help you with paperwork filing and submission, and ensure that you qualify for the loan with the best terms and rates.
§ Lines of Credit
‘Lines of Credit’ is a business loan type that functions like a credit card. It allows entrepreneurs to quickly access and use funds up to their credit limit. It’s best for:
- Managing business emergencies and cash flow needs
- Handling day to day expenses like inventory purchases, advertising and payroll
- Financing seasonal needs
What makes this loan different from other business loans in Bedford, TX is that the loan applicant doesn’t receive a lump sum amount once the loan is approved. Instead, it opens a line of credit, as the name suggests, allowing business owners to access and draw funds incrementally, when the need arises.
It is distributed by licensed lenders and banks. To qualify for this loan type, it is important to have a good credit score and strong revenues. Generally, the compounded interest and fee for ‘lines of credit’ is quite high. This loan is not recommended for business owners seeking business expansion or improvements.
§ Equipment or Vehicle Business Loans in Bedford, TX
If you want to expand your business fleet by adding new vehicles or you want to speed up your business operations by buying advanced equipment, but don’t have the funds, then you might want to avail the equipment/vehicle loan option. With this loan, you can buy the equipment or vehicle that you need for your business operations. The terms of the loan are determined according to the expected lifespan of the equipment or vehicle, while the rates are determined based on the equipment or vehicle value and also, the strength of the borrower’s business.
§ Account Receivable Loan
Among the different types of business loans in Bedford, TX, account receivable loan is quite common and popular especially among those business owners who offer flexible payment options. Also called receivable financing, this type of loan helps business owners convert sales on their credit terms to cash immediately. This loan type is best for those businesses who have unpaid invoices and require fast cash and those who have reliable/credit worthy clients on long payment terms such as 60 to 90 days.
Though this is a great way to access fast cash but the downside of this loan type is that the borrower has to sell off the invoices to the factoring company which means the borrower loses control of invoice collections. Besides this, the receivable line of credit is costly and may also require the borrower to exhaust all financing efforts. The borrower usually ends up paying more in the form of interest rates, discount fee, and other charges.
Kirksey Business Brokers Can Help You Navigate Through the Different Types of Business Loans in Bedford, TX and Get You the Best Payment Terms and Lowest Rates
Get in touch with Kirksey Business Brokers to make sure that you select the best loan option out of the many available business loans in Bedford, TX. At Kirksey Business Brokers, we understand that every business has different business needs, therefore our team sits with you to understand your business loan requirements and accordingly help you navigate through the different options available. We assist you every step of the way, from completing paperwork to finding you a lender that offers the best loan terms and rates. Contact us today!