The Ultimate Guide Book for Entrepreneurs about Different Types of Business Loans in Colleyville, TX
Business operations require a careful consideration paid to the financing methods. Your business’ capital and revenue expenditure when combined together can cost you tons of dollars. This is why debt financing is an important source of funding your business. Credit institutions such as commercial lenders and banks can lend you a loan to finance your commercial activities when you are operating your business in Colleyville, Texas.
However, it is very important for you to have certain knowledge about debt financing before you go ahead and borrow a lump sum amount. This is entirely for your own social and financial security. Even though the institution you would seek a debt from is obliged to help you out, having an idea beforehand can keep you informed and assist you in choosing the right means of financing for your business loan.
Let’s take a look at some of the business loans available that you could borrow for the debt financing of your Colleyville TX business:
1. Line-of-credit
Small business operations require lesser expenditure as compared to those that operate on a massive scale. The line-of-credit loan is specifically designed for small scale businesses that may run out of cash flow in the short run and might be in need of sufficient cash to allow them to purchase stocks for their business or to be able to pay for the revenue expenditure.
Since line-of-credit is loans modified for small scale needs, they are inadequate to finance hefty expenditures such as property purchases for your business. When you ask your bank to lend you a line-of-credit loan, what basically happens is that the amount essential to cover up the due checks of your business is transferred to the bank account that will allow you to pay off your debts.
This type of debt financing is extremely useful due to the low rates of interest affiliated with this means of debts and has to be paid back at monthly intervals. Make sure you’re prepared with all the necessary documentation of your business in Colleyville, Texas such as projected cash-flow statement, up-to-date financial statements and even your tax returns before you ask for a loan.
2. Installment loan
Regardless of the tenure of your loan, be it short or long term, installment loan can be lent to you upon request and after presenting authentic documentation. This type of a loan can be as low or as huge of an amount depending on the credibility you have sustained as an entrepreneur in Colleyville, Texas. You will have to sign a mutual contract before you receive the full amount of your business loan that will even specify the date of return of this loan.
The interest rate will also depend on the total duration that you will need the loan for. For example, if you need a loan for four months, you will be charged with an interest rate for exactly 4 months but considering the risk of time is low, the rate will be low as well. If you need an installment business loan for over a year to finance a business cycle, the length of time could range up to 7 years while business loans borrowed for the financing of property purchases can range up to 21 years.
You must note that when you borrow an installment loan for your business in Colleyville TX, you ought to return the amount of principal and interest on the intervals that you agree upon with your bank.
3. Interim loans
When you are operating a business, it is inevitable that at some point you will need a proper office building of your own. Even when you are already operating as a construction business and need to finalize the purchases of a certain property before time, you need some extra funds in order to finance the expenditure.
This is when you derive the benefits from a short-term, interim loan that is specifically designed to assist your funding. With an interim business loan, you would be able to close off the property purchases before time since the interim business loan will cover up the extra costs that you need but do not possess in the moment. The rate of interest on interim loans is generally low but can vary depending on the number of months you borrow the business loan for to ace your entrepreneurial expertise in Colleyville, Texas.
4. Balloon loans
Common amongst commercial real estate businesses is balloon loans. These are the type of business loans that refrain from amortization completely. Although the amount borrowed for the business loan and the length of time it is borrowed for may vary, the repayment of this loan is made in small amounts at regular intervals. The reason why this type of a business loan is known as a balloon loan is because of the exception created that the last or final repayment for the business loan borrowed for your business in Colleyville will be a massive amount that will pay off the due balance completely.
This benefits the borrower mainly as the interest rates in the later years are far lower than compared to those in the years of your business loan’s pre-maturity. Generally, these loans are allowed for tenure of 3 years and have to be repaid by the end of the third year. Why these loans are so friendly is because the repayment amount is spread over a period of 10 years, which lessens the amount of monthly repayments.
What to do?
Are you looking for reliable ways to borrow business loans from trustworthy sources for your business in Colleyville, Texas? Head over to the official website of the Kirksey Business Brokers or call us at 817-637-1508. Trust us, we will take care of the entire borrowing process from scratch and you can count on us to answer all your questions.