When you are running your small business, you need to be aware of all the financing options that are available to you. That’s because having quick access to funds can help you tap into the right opportunities, make strategic moves, and keep your business agile. So, here are some of the best small business loans you should know about to help run and grow your business:
1. Peer-to-peer lending
In Peer-to-Peer (P2P) lending, you can get the money you need for your business directly from other individuals looking to invest through the P2P platform. This is one of the best small business loan options out there because the loan amount you can get through P2P lending is also higher while the eligibility criteria is basic. The entire process is quicker and the accessibility to funds is better. However, this option may end up being costlier than taking a business loan from a bank because the rate of interest is usually higher. Hence, P2P lending makes for the best business loan option only when you are in urgent need of funds. The entire process is also online and seamless.
2. Loan against credit card receivables
If you have a retail business, then you can make use of a loan against credit card receivables offered by most financial institutions. Here, you can apply for a small business loan against your credit card receivables to fund your liquidity needs. Think of it as a line of credit or an overdraft. The amount of this small business loan will depend on the amount of yearly sales that go through your credit card POS terminal. This makes for one of the best business loans for retail businesses and it requires no collateral either.
3. Micro loan
If you are just starting out and need a business loan of a small amount, then you can opt for a micro loan. These are the best business loans for startups and small businesses and tend to have lower interest rates. They are usually provided by non-traditional lending platforms and tend to have tenures between two years and five years.
4. Working capital loan
When you need funds to manage your day-to-day operational expenses such as paying wages, buying inventory, etc., a working capital loan can come in handy. It can provide you with the liquidity that your business needs to stay agile and help meet expenses until you have collected your accounts receivables. A working capital loan can also help you take advantage of business opportunities. For instance, if you get a huge new order but don’t have the funds to keep up with the required inventory, you can apply for a working capital loan to fund that order. Working capital loans hence work out to be one of the best small business loans out there.
The important thing when looking for a business loan is that its application process is simple, and the disbursal of funds is quick. That along with attractive rates of interest and basic eligibility criteria makes for the best small business loans.