Types of Business Loans

Standard business loans can take on several different forms in specific situations:

Term loans are the most common general purpose loan. They're used for working capital, expansion, refinancing, and acquisitions. You'll repay them monthly over a term based on the expected lifespan of the assets you're purchasing. This straightforward loan is most common for larger amounts.

Short term loans are almost always set up for terms of one year or less, and are repaid in a lump sum at the end of the term, instead of monthly. They're usually for smaller amounts - less than $100,000 - and are best for seasonal inventory buildup or small investments with quick returns.

Equipment financing is generally easier to obtain then general lines of credit, simply because the equipment you buy serves as direct collateral for the loan. It's also less risky, in that if you are unable to make your payments, you don't have a lien against your entire business or your personal real estate: all you lose is the equipment you bought. Depending on the size of your business, equipment financing can cover huge expenses into the millions of dollars.