If you're looking for debt financing for your business, there are many sources you can turn to, including banks, commercial lenders, and even your personal credit cards. And you don’t need to pinpoint the exact type of loan you need before you approach a lender; they will help you decide what type of financing is best for your needs. However, you should have some general idea of the different types of loans available so you'll understand what your lender is offering.
1. Line-of-credit loans. The most useful type of loan for small-business owners is the line-of-credit loan. In fact 2. Installment loans. These loans are paid back with equal monthly payments covering both principal and interest. 3. Balloon loans. Though these loans are usually written under another name, you can identify them by the fact that the full amount is received when the contract is signed 4. Interim loans. When considering interim loans, bankers are concerned with who will be paying off the loan and whether that commitment is reliable.
5. Secured and unsecured loans. Loans can come in one of two forms: secured or unsecured. When your lender knows you well and is convinced your business is sound and the loan will be repaid on time 6. Letter of credit. Typically used in international trade, this document allows entrepreneurs to guarantee payment to suppliers in other countries. Banks all over the country write loans, especially installment and balloon loans, under a myriad of names.
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