FinancialInvestingBankingPlanningCareerPurchasesCommunity

S.T.E.P.S. - Smart, Tailored, Event-Driven, Packaged Solutions
provided by Women's Financial Network at Siebert

Types of Loan -- Part VI

Once you have evaluated your goals and realize your credit standing, you are ready to think about which loan best suits your needs. There are many different kinds you can consider for your small business. In this section we'll cover:

Let's look at each more closely now.

1. Interim or short-term loans
Short-term financing is generally used to support working capital, operating expenses, and immediate cash flow problems. Short-term loans obtained for business purposes are usually appropriate only until a source of longer-term funding is possible.

  • For example, consider a short-term construction loan to build a warehouse. When the building is complete, a long-term commercial mortgage is used to repay it. The mortgage, similar to a home mortgage, is paid back over a number of years. This timeline is usually preferable for larger dollar obligations.

2. Long-term loans
Long-term financing is normally used for equipment, including vehicles, computer hardware, software, and machinery.

3. Production loans
Many banks provide short-term loans for production. These production loans are typically done under a line of credit for established small businesses.

4. Commercial loans
Commercial loans are used to finance working capital, accounts receivable, purchase orders, or inventory. Typically assets are needed to secure this type of loan.

5. Asset-based loans
As the name suggests, with an asset-based loan, you pledge assets to your loan from the bank. Although technically you still own your assets, if you fail to make your payments, the lending institution has the right to seize them.

Continue to: Part VII: Applying for a bank loan

To open a brokerage account, click here for Women's Financial Network at Siebert, where Smart Women Invest.

In this course, we will cover the following:

Evaluation and Analysis
Evaluating a Loan
Sources of Funding
Qualifications and Credit History
Types of Loans
Applying for a Bank Loan
Special Assistance Program
 

 

Site Map | About MsMoney.com | About Tiffany Bass Bukow | Contact Us | Privacy | Terms of Use

 

Copyright © 2006 MsMoney.com, Inc. All rights reserved.
MsMoney.com is a trademark of MsMoney.com, Inc.