With every business, there are times when outside financing is needed to grow your business. Choose the best financing option for your business to achieve your goals.

Term Loans

This type of loan is the most familiar loan structure. Upon approval of the loan, you receive a lump sum payment at the beginning of the loan, and over time you make regular payments to repay the balance of the loan plus interest. A term loan is perfect if you have a specific project or product that you need for your business. Generally, a term loan could be secured or unsecured.

A secured term loan requires the borrower to place collateral on the loan; you would see this with auto loans, equipment, and mortgages. When a term loan relates to a business, there are times when a lender may require to place a lien on equipment or assets of your business.

An unsecured loan will not require collateral to receive the loan. These loans often have higher interest rates but lower the risk towards other assets of your business. Unsecured term loans prove to be harder to qualify for with a lender.

Accounts Receivable Financing

While it is not unheard of for smaller businesses to receive accounts receivable financing, it is mainly used by larger businesses that hold open invoices owed to them by their customers. When you file for accounts receivable financing, you will share your invoices or accounting software access to prove that you have unpaid accounts receivable.

Your lender could structure this loan where you would receive a lump sum or a line of credit. The line of credit could function much like a credit card. Regardless of the structure, you must repay the loan plus interest on a predefined timeline. However, some lenders require you to set up a new account and provide directions to your clients to make payments to that specific account. This account will be under the lender’s control. If you want more information on the ins and outs of accounts receivable financing, read this booklet from the Office of the Comptroller.

First Class Lending can help you find suitable financing options for your business that will help you grow into the business of your dreams.