A business loan comes in many different options for consumers. The
following are brief descriptions of several types of business loans. Individuals considering their
need for a business loan can utilize these descriptions for a general understanding of their
differences/benefits.
SBA Loan:
A government insured business loan backed by the Small Business
Administration (SBA). A borrower must be categorized as a small business by the SBA in order to
receive this type of small business loan. This type of loan generally has lower interest
rates.
Revolving Line of Credit Loan:
A line of credit loan allows the borrower to borrow a specified
amount of money. When the original amount of money is repaid, the borrower has the option to borrow
the same amount, again.
Line of Credit:
A loan authorization that provides a borrower with a financial
limit for a specified amount of time. The borrower can obtain numerous loans without the need to
reapply for each loan, so long as payments are made and the borrower does not surpass their credit
limit.
Secured Loan:
A loan that is secured through collateral. With this type of loan,
the financial institution takes security interest in whatever possessions you use as
collateral.
Unsecured Loan:
A loan that does not require any form of collateral. Interest
rates usually vary greatly with this type of loan.
