As a business owner, you may need to obtain financing at some point to help with the growth of your company. There are many different types of lending instruments available, each with its own set of terms and conditions. Let’s take a look at some of the most common types of business lending instruments so that you can make the best decision for your company.
Business Equipment Loan
One option for financing is a business equipment loan. This type of loan can be used to purchase new or used equipment for your business. The terms of this type of loan are usually shorter than other loans, such as a commercial mortgage, and the interest rates are typically lower as well.
Commercial Mortgage
A commercial mortgage is another type of loan that can be used for business purposes. This type of loan is usually used to purchase commercial real estate, such as an office space or retail storefront. The terms of a commercial mortgage are usually longer than a business equipment loan, and the interest rates are typically higher.
Invoice Factoring
Invoice factoring is a type of financing where businesses sell their outstanding invoices to a third party at a discount. This type of financing can be helpful for businesses that have difficulty obtaining traditional loans. The terms of invoice factoring can vary depending on the third-party provider, but usually involve fees and interest charges.
Working Capital
Working capital is the funds that a business has available to cover its short-term expenses. This type of financing can be obtained through loans or lines of credit from financial institutions. The terms of working capital loans can vary depending on the lender, but typically involve fees and interest charges.
Business Credit Cards
Business credit cards are another option for financing your business. This type of financing can be helpful for businesses that need to make small purchases or need access to revolving credit. The terms of business credit cards can vary depending on the issuer, but usually involve fees and interest charges.
Conclusion:
There are many different types of lending instruments available for businesses, each with its own set of terms and conditions. As a business owner, it’s important to understand the different options so that you can make the best decision for your company. If you’re considering obtaining financing, be sure to speak with a business advisor to learn more about the different types of lending instruments and which one would be best for your business needs.
