BLOG

Types of Business Loans Available in Grapevine,TX

Many people who are thinking of starting their own business, they have the idea in mind and a plan in hand, but sometimes, they are short on financing and because of that, many brilliant business ideas get lost somewhere. However, as the economic and market structure is changing and it is observed that many new businesses are all set to enter into the market, their potential contribution to the economy has compelled many firms to make investments in these businesses. There are more lenders now than there were a decade ago. Acquiring business loan has become quite easy and is being offered on simple terms. All you have to do is prepare your business plan, and take that to the financing firms. They will evaluate the feasibility of your business idea and lend you the money accordingly.

There are many ways you can acquire a business loan in grapevine, TX and some of them are mentioned here to give you a general idea about them.

Line-of-credit loans

Line of credit is a contract between the lender and the borrower where a fixed amount is decided as a loan to be given and an account is opened in the name of the borrower who can take the money out for an extended period. Most small businesses rely on this type of loan, as it is a stable loan settlement between the lender and the borrower, and it takes care of your short-term expenses such as your operational costs and all your regular business needs. This type of loan is not suitable for making a big purchase or a start up. However, once your business has started and all its operations are running, the line of credit is an option you can consider when you run short on cash. You pay an interest amount every month, but these interest rates are lower than other loan options out there because of lesser risks involve. In such a type of loan, you are given the right to cancel your terms, if you feel that your business is not performing well and you will not be able to pay it back if continued.

Installment loans

In this type of loan, you are given the entire amount of loan in lump sum, when you finalize the deal with the lender and according to your business needs, the duration of the loan is determined and the interest rate depends on that. In this loan, you pay off the principal amount in installments, along with interest amount. Mortgage loan is an example of this loan. These loans can be issued for as low as four months and as long as 30 years. You can mutually plan and decide the loan schedule with your lender, and you are also given the choice to pay the installments on quarterly basis, semiannually or monthly basis. If you think you will not be able to break the amount within the year, you have the option of paying it on an annual basis too. These loans are generally large amounts and suitable for big business startups, such as real estate business.

Balloon loans

This type of loan allows you to acquire the amount without having to pay it off in monthly installments. A principal amount is set and the interest rate is applied on it to calculate the interest payable, after that a date or a term is decided when this amount would be paid back in one big payment. This type of loan is for those who do not want the pressure of having to pay every month. However, this loan can become difficult if you, for any reason, are unable to pay the balloon amount at the end of the term. The name ‘balloon’ is given to it due to the fact that the principle amount turns into quite a heft amount, by the end of the term due to the interest applied. This type of loan is suitable for a business where you know that you will receive payment on a fixed date.

Interim loans

This type of loan is categorized under short termed loans that are given to borrower for completion of any given project without him having to draw the money from other sources or disturbing any other projects.  

Secured loans

Secured loan is a type of loan where the lender asks you for collateral to keep against the amount you are borrowing. This type of loan has lower interest rate as compared to other type of loans. However, the lender still sees you as high risk, hence the collateral. The collateral is valued against the amount you are borrowing so that in case you are unable to pay in the end, the collateral can be used.

Unsecured loans

This type of loan is lent based on your creditworthiness. You do not need any collateral to support your loan in case you default. It is mostly given to those with a strong credit history and a strong business, as the lender does not see you or your business as someone to become a defaulter any time soon. However, you can only acquire this loan if you have an already running business. This loan type is not the best bet for start ups.

Letter of credit

This is a type of guarantee on the borrower’s behalf that is provided by a bank of one country to the bank of another country for the purchase that a borrower would make in that country. This type of credit is used if you want to purchase something from a foreign country and need credit for that.

Account receivable loans

This type of loan is given to the borrower and is secured against the accounts receivable of your business.

Inventory loans

Inventory loan and one other type, called equipment loans, are given to a business for the purchase of an equipment or inventory and it is secured against any other equipment.

Commercial loans

It is a very common kind of loan that every commercial bank offers to a business under certain terms and condition. Each bank has its own interest rate that keeps changing in accordance with the market trends.

OUR VAST NETWORK OF FINANCIAL CONTACTS EXPEDITES FINANCING AND CLOSING THE DEAL.