There are various types of business funding.
The most popular types of business funding include term loans, lines of credit, business credit cards, equipment financing, microloans, invoice financing and merchant cash advances.
1. Business Line of Credit
This line of credit is similar to a business credit card as a lender approves you for a certain amount of money available to be drawn when needed. Interest is only paid on the funds taken out, and as the lender is repaid, the money is available once again without having to reapply for the loan.
2. Short-Term Loan
A loan, provided by a bank or alternative lender, with a term of 3 – 18 months.
3. Long-Term Loan
The terms of these loans are generally flexible to a business’s needs and vary as such.
4. Merchant Cash Advance
A merchant cash advance provider reviews and determines if the borrower can repay a cash advance in a timely manner based on their daily credit card receipts. Small business then sells a portion (cost expressed as factor rate) of those sales to the lender to acquire the advance.