Types of Loans Available
Commercial bank loans don't require entrepreneurs to turn over equity or company control. In general, commercial banks don't like to lend less than $10,000 and like to see:
- Good credit
- A solid business plan
- Ability to repay the loan
Microloan programs and Community Development Financial Institutions (CDFI) are non-bank lenders who are willing to take on a little more risk than most commercial banks in terms of both credit history and collateral. Search the Resource Navigator under Debt Funding.
Line of Credit is an arrangement in which a bank extends a specified amount of credit to a specified borrower for a specified time period. A line of credit is best suited to help cover expenses that tend to fluctuate throughout the course of a year. They are commonly used by seasonal businesses.
Home equity loans are a cost-effective alternative to other types of loans because they offer good interest rates. But you may not want to risk your family home to launch your business venture.
Equipment lease financing gives you access to many types of equipment – computers, copiers, fax machines, cars and trucks – without tying up your cash or credit lines. Although it doesn't bring in cash, leasing reduces the amount of cash you otherwise have to raise to start.
Cash advances from credit cards are an easy and quick way to gain access to cash. But as a long-term financing method, they can be expensive. Credit card interest rates typically run much more than you would likely pay on a bank loan.
Factoring allows a company to "sell" its accounts receivables to an outside company at a discounted rate. This allows the company to receive funds immediately to fund operations and ease cash flow. Factoring is done by private companies.
Both the U.S Small Business Administration and Business Oregon have programs which work hand and hand with commercial banks to assist small businesses with gaining access to capital. Visit their websites to find out about their current programs.