What to Know When Choosing a Small Business Loan

Taking out a loan or line of credit is a very important decision for a small business. There are some very important things to know when evaluating your options.

Come up with a plan for when you need the money and when you can pay it back. This will give you a good start to deciding what kind of lender and what kind of product will work best for you. You have options; SBA Loans, traditional banks and alternative lenders. Each has their pluses and minuses and each will offer different products.

SBA Loans tend to be the cheapest option but come with the most catches. The application process can be long and laborious. Once you get an SBA loan you are locked in and any future borrowing becomes difficult because an SBA loan will always have a lien attached to it that cannot be subordinated to another lender, even if you grow and have further collateral to pledge to a new lender.

Traditional banks are less expensive but also time consuming. They are more flexible than an SBA loan and can be used for a variety of different purposes like real estate, working capital, equipment and other items. A bank may not be willing/able to grow with you and continue to fund you as your needs increase.

Alternative lenders have become a great source for SMBs. Alternative lenders typically charge more but are fast, flexible and can issue both secured and unsecured loans for any number of purposes. One of the easiest and best uses of an alternative lender is for working capital in the form of PO and Invoice Financing as well as asset based lines of credit.

About Payplant

Payplant provides growth financing for entrepreneurs, by entrepreneurs. Its Pay Me Now^TM digital invoice-financing service provides cash to businesses when their customers pay too slowly. Payplant helps businesses with PO and Invoice Financing, Asset Based Lending, Term Loans and Customer Financing products. Payplant works with companies that don’t currently qualify for traditional bank financing, have grown too quickly for their current lender or are at the point in their evolution where an influx of working capital can elevate their business to achieve rapid growth. Payplant delivers fast and reliable funding, at very attractive rates and is completely on demand. For more information, visit www.payplant.com.