Getting a new setup? Starting a new business? Buying a new home? New beginnings can be exciting and risky at the same time. Getting frustrated and exhausted during the start of a new venture is bound to happen. And when you find yourself short of money it can be quite a challenge. Applying for a loan or borrowing money in situations like these is understandable. Though here are a few kinds of loans you should know about before walking into a bank and getting a loan.
1. Working-Capital Loans:
If you are starting a small business or already have one and need some money to keep it up and running, working-capital loans are for you. It offers short term solutions, if god forbid your business isn’t working to its full potential, the loan you will get will fix the mess until the set up starts generating enough revenue on its own. However, be warned that they are often associated with ridiculously high interest rates and have limited time for repayment.
2. Equipment Loans:
Every business needs some kind of equipment be it a computer, a copy machine, a cash register, etc. Equipment loans offer just that. Small business can get their own machinery by applying for this kind of loan. Monthly payments can be made if you negotiate the terms and conditions with your lenders.
3. Lines of Credit:
Similar to working capital loans, lines of credit are short term as short as 90 days. The program provides loan to small businesses for regular issues and cash flow maintenance. They are not suggested for making large investments or purchases. This enables you to buy only what you need, and investments are made only on the items you use. Comparatively to others, they have longer repayment timeline. The only issue here is that they charge additional fee and if interests are not made in time you could find yourself in a lot of debt.
4. Professional Practice Loans:
These loans are specifically for people in the practice sector, for example, medicinal like doctors and dentists, mental health professionals, lawyers, insurance officers, accountants, engineers, architects, real estate, etc. These loans are usually used for buying a space, renovating the office or buying appropriate furniture or equipment.
5. Franchise Startup Loans:
If you are or you know an entrepreneur who needs financial help for launching their own start up, this is the appropriate choice to go for. Buying a franchise, building an office or restaurant or store, and buying equipment comes under the description.
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