What Is A Business Loan?
Starting and maintaining a small business has always offered Canadians an alternate career route over the traditional 9-to-5 work schedule. Despite your control over your day-to-day work when you operate your own business, it can be especially hard to either get it off the ground or provide meaningful updates if you can’t secure the right financing.
Business Loans are designed to help out current and prospective owners with an influx of cash to help them develop their businesses from different angles. These types of loans can typically come from the usual banks but also from private lenders, like Service Capital, and credit unions. Once the business owner and the lender come to terms on a loan, the former will receive a lump-sum payment that they will have to repay in installments.
Naturally, issuing a loan isn’t risk-free, so how do these deals go through without the lender putting themselves at risk of major loss? They can provide a secured loan which would allow the lender to place a legal claim on the borrower’s assets in the event that they cannot pay the loan back. While the types of assets can vary from borrower to borrower, it’s important to understand the risks prior to taking out a loan.
Once you’ve accepted the potential collateral needed to take the loan, you can agree with the lender on the type of loan you want. A Term Loan will provide borrowers with a lump-sum of cash which they can repay over a set amount of time with either fixed or floating interest rates. They’re typically used by small business owners to purchase equipment, buildings, or any other expensive assets. One of the advantages of this type of loan for small business owners is the flexibility they’ll gain to repay the debt they owe.
On the flip side, business owners seeking capital just to help their day-to-day operations can look to Working Capital Loans. The funds would be used to cover payroll, rent, or debt payments owed to other institutions. Think of them as the opposite of the term loan.
While these types of loans only offer a brief overview of what a business loan can do for your small business, it’s important to understand that there are several options that will be perfectly suited to your business needs. Should you be interested in learning more, feel free to contact us at Service Capital with your queries and we’ll set you up as you need!