How To Get a $50,000 Business Loan

Term Loans

A term loan is one of the most popular types of loans and the most common for a business loan up to $50,000. It usually involves the borrower receiving a lump sum amount, repayment terms for a fixed amount of time (3 years, five years, etc.), with fixed or variable interest rates and a fixed monthly payment. This loan type is most common with traditional banks and credit unions.

Business Line of Credit (BOL)

A business line of credit is different from a term loan mainly because a BOL is “ready cash”. That means the borrower takes the money when needed and not as a lump sum. A business line of credit is a valuable tool for businesses because it can be used on a revolving basis when needed, and when you don’t need the cash, you only pay the interest rate on the actual amount drawn.

Banks and credit unions will be the most likely small business lenders for this type of financing when you maintain a business checking account. A BOL is highly suited for business loan amounts of $50,000.

Business Credit Cards

A business credit card is another option for business financing. However, most business credit cards charge a high annual percentage rate and will often look at a business owner’s personal credit score. With good credit, a small business owner could use a business credit card as a means to $50,000 in business financing.

One added benefit to using a business credit card is those card providers may allow you to accumulate cash-back or earn rewards for every dollar spent using the card.

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Small Business Administration (SBA Loans)

The U.S. Small Business Administration does not lend directly to businesses. Instead, an SBA loan is made by an online lender or traditional lender, such as a bank and the SBA guarantees payment to the lender if the borrower defaults.

An SBA loan is generally associated with loan amounts of several hundred thousand dollars and is an ideal source for a $50,000 business loan. SBA loans are very desirable because they will have lower interest rates and very favorable repayment terms.

One of the most popular loan types from the SBA is SBA 7(a) loans. Additionally, many SBA loan programs can be used to refinance existing loans.

Equipment Financing

If you are seeking a $50,000 business loan to acquire equipment for your business, you may want to consider equipment financing. With an equipment financing plan, a finance company or equipment manufacturer will provide the financing for you. This type of financing has some advantages over borrowing cash to purchase your equipment.

With Equipment financing, it’s common to use the equipment being financed as collateral. And while you may be required to make a down payment, it’s common to finance up to 100% of the equipment cost. Equipment financing will usually carry a lower interest rate because it’s not an unsecured business loan…it’s secured by the equipment.

Alternative Financing: Merchant Cash Advances

While they are not loans, merchant cash advance can be used very sparingly and generally as a last resort. Merchant Cash advances are typically short-term financing based on your company’s credit card transactions. Depending on your volume of monthly credit card sales, you can qualify for $50,000 in business financing quickly. But be cautious, merchant cash advances can be among the most expensive business financing options.

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