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What types of business loans are there?

 

The right type of financing can help you achieve your dreams and goals as a business owner.

There are many different types of business loans specifically for businesses that are designed to fulfill certain needs. While a professional loan officer can help you pick the right financing option for your business’s requirements, start here with some basic financing information to help give you a better understanding of your options.

Blog illustration: There are many types of business loans that are tailored to small businesses.

What kinds of business loans are there?

 

Small Business Administration (SBA) Loans

The U.S. Small Business Administration is an organization that works to “ignite change and spark action so small businesses can confidently start, grow, expand, or recover,” according to their website. It is a government agency that offers valuable resources to those who own a small business. There are significant benefits that are available to those who qualify for a small business loan. Some of these advantages include longer repayment terms as well as both fixed and variable rate interest rate options to choose from.

With an SBA loan, you can be sure that a bank like Bank Midwest will partner with you to help you take advantage of this low-cost financing opportunity to grow your business. You can borrow up to 5 million dollars in some cases. However, there are some things to keep in mind about SBA loans. Because of its great benefits, it can be difficult to qualify and the application process is long and extremely thorough. A loan officer can help you with the process to make it more manageable.

Business term loan

One of the most popular and commonly used business loans, term loans have many advantages of their own. The accepted applicant receives a lump sum of cash upfront. The amount is paid back to the bank with interest included over a specific period of time. This can be advantageous because the business owner can use the money that they get right away to enhance their operations.

Note that, due to the upfront cash loan, a lender may require significant collateral in order to ensure their loan. A term loan is ideal for business owners who have good credit history and are interested in receiving their loan amount relatively quickly.

Equipment loan

There are equipment-specific loans that business owners can receive to buy new tools to build better operations and even expand their reach. The loans are often only for the projected life term of the business equipment. In the case of this kind of loan, the tools themselves act as the asset collateral for the lender.

Business auto loans

Similar to a personal auto loan, the cars and other kinds of transportation that a business auto loan can offer an entrepreneur may be very important. With a new business car, your company can now offer delivery services, which can expand the operation itself. Speak with a lender to understand whether a business auto loan would work better than another business loan, which could still buy a vehicle for the company.

Operating Loans and business Line of Credit

At Bank Midwest, we offer term-specific, fixed-rate operating loans for designated projects and equipment purchases. One of the benefits of business loans is that they can be more flexible than other kinds of business term loans. Business lines of credit are ideal for ongoing access to funding for cash management and expenses. A business owner can take draws as needed and repay balances to make funds available again. This is a great way to get new technology and other tools that your business may need to succeed.

Commercial Real Estate Loans

Commercial real estate loans are an important option for many business leaders to expand their companies. When the time comes to reach new highs, this kind of loan is perfect for buying a new property. Whether you need another storefront or another acre for your farm, commercial real estate loans can help you achieve this dream.

Bank Midwest understands that not every business is the same. Because of this, we can put together tailored packages taking into consideration your entire financial picture and featuring affordable, cash flow-friendly monthly payments. We use three main tenets to empower your business through commercial real estate loans:

  • Own it.
  • Expand it.
  • Create it.

Reach out to a commercial or business lender near you to find the right loan option for your expanding business.

Personal loans for business purposes

While this business loan type is not used often, a personal loan can be used in specific situations. Most of the time, a new business owner can use a personal loan to help them with their fresh startup. This is because many lenders only give business loans to companies that have a prior credit history.

Other options:

Bank Midwest has healthcare equipment financing options for those who are looking to grow their medical practice. OnePlace Capital, a national division of Bank Midwest, specializes in equipment financing for medical, dental and veterinary practitioners.

In addition, we offer Visa® Business Credit Cards for those who need a low rate, cash back or flexible rewards. A business credit card is often an important part of building your business’s credit score. Learn more about business credit cards here.

Are you ready to grow your company with a Bank Midwest company loan? We are ready to support you every step of the way, from the very beginning to the growing pains that an expanding business goes through.


To discuss your financing needs with Bank Midwest, request a call back today!

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