Types of Loans Available
Commercial bank loans don't require entrepreneurs to turn over equity or company control. In general, banks prefer to make loans of over $10,000. Banks like to see:
- Good credit
- A solid business plan
- Ability to repay the loan
Line of Credit. An arrangement in which a bank extends a specified amount of credit to a specified borrower for a specified time period. A line of credit is best suited to help cover expenses that tend to fluctuate throughout the course of a year.
Home equity loans are a cost-effective alternative to other types of loans because they offer good interest rates available. But you may not want to risk your family home to launch your business venture.
Equipment lease financing gives you access to many types of equipment -- computers, copiers, fax machines, cars and trucks -- without tying up your cash or credit lines. Although it doesn't bring in cash, leasing reduces the amount of cash you otherwise have to raise to start.
Cash advances from credit cards are an easy and quick way to gain access to cash. But as a long-term financing method, they can be expensive -- credit card interest rates typically run much more than you would likely pay on a bank loan.
Factoring allows a company to "sell" its accounts receivables to an outside company at a discounted rate. This allows the company to receive funds immediately to fund operations and ease cash flow. Factoring is done by private companies.
Special Missouri Loan Funds
In addition to commercial loans available through local banks, there are a number of loan programs in Missouri that support special needs.
The SBA provides a summary of their loan products.