Various Types of Business Loans

Various Types of Business Loans

As a business owner there are various challenges that you have to deal with on a daily basis. The most common one for many business owners is a lack of finance. While there are numerous ways to raise the necessary capital for running a business, the most common form of business finance is the business loan. 

Just as each business is unique, there are unique loan needs as well.

Long term loan:

This type of loan is the most common type distributed by large commercial banks. Often used for business expansion, acquisition and refinancing, long term business loans are offered at lower interest rates. These loans are repayable over a long period of time. Repayment terms can be extended over periods ranging from 10 to 20 years.

Short term loan:

These loans are useful for retailers and are ideal for raising cash for accounts payable. As a business owner, you can also rely on this type of loan for short term needs, such as maintaining inventory. Many businesses also rely on this form of financing for operational costs.

Franchise Start Up loan:

If you are interested in purchasing a franchise, this type of loan may be ideal for helping you acquire the necessary capital. Banks may provide qualifying individuals with the necessary finance to purchase a franchise. Qualifying criteria are quite stringent, so applying for this type of loan requires individuals to provide accurate documentation and an excellent business plan.


This may be an ideal way to manage your cash flow if linked to your business account. Having an overdraft allows the business to access funds even when the business account has run out of funds. This allows you to continue to run the business efficiently and effectively with a fairly consistent cash flow.

Before approaching your bank for a business loan, ensure that you know what type of finance your business needs and what you require to apply.

Categories: Loans