Growing a small business can be tough, which includes finding funding and managing cash flow. According to Signature Analytics, 82% of businesses fail for lack of money and 55% of business owners say cash flow is the top challenge in growing a business. This is why how to grow a small business with loans and lines of credit is critical in financing continued growth.
The Basics of Small Business Funding
As a business owner, you’re able to use the funds from loans and lines of credit for any business purpose. This includes things such as working capital, expansion, renovation, marketing, purchasing inventory, hiring employees, and much more. The first step you should take before applying for funding, however, is determining what a loan or line of credit would mean for your business, what goals you aim to achieve, and how that will translate into ongoing growth.
Small Business Loans Versus Lines of Credit
Two of the most common types of express loans for small businesses are term loans and lines of credit.
- Term loans — Borrowers are given a lump sum of cash upfront that is repaid over an agreed-upon time period and within specified lending terms. These loans require collateral in exchange for the loan as well as a down payment. You can often secure higher loan amounts through a term loan and can make lower payments over a longer time period.
- Lines of credit — These function much like a credit card in which you are granted up to a certain credit limit and can access those funds at any time and in whatever amount. As you continually pay off the outstanding balance, the available credit replenishes. You are only required to pay interest on funds that have been withdrawn.
What are the Benefits?
The reason term loans and lines of credit can be so beneficial for a growing small business is that owners can access the funds as quickly as two or three days versus 10 or more. Based on your business health, length of time in business, and credit history, you can qualify for a term loan or line of credit that can help you swiftly ramp up business, particularly during the startup phase.
One of our biggest priorities for small business borrowing at Republic Bank is making it as straightforward and headache-free as possible. Our easy application process and instant decisions can get you up to $250,000 in just 24 hours. Our term loans have up to a five-year term and our lines of credit have a term of up to two years. Both types of loans have incredibly competitive interest rates, so your capital works for you versus the other way around.
To learn more about our small business loans, reach out to us at 800-526-9127 or start an application online today!