There are many different types of loans and, dependent on your business, you will need a specific one. It is vital that you as a business owner know and understand the different kinds so you can wisely search for the best loan for your current situation.
Of course, we at Legacy Capital Lending are dedicated to finding you the absolute best loan for your business. We often seek out different lenders to find a great match.
Traditional Term Loans
This is in general what most people think of when they think of commercial financing. If you went to a bank for funding this is the type they often loan. The purpose of the funds can be broad like expansion or simple advertisement funding.
These amounts range from $5,000-$5 Million and can be in lengths of 1-25 years depending on what you need. The interest rates often change but in general their range is 6.5%-30%.
How long does it take to fund? This answer depends on your situation of course but can take up to multiple months so you need to get started today.
The Small Business Administration partially guarantees these types of loans to lenders. The purpose of these loans can be broad similarly to traditional term loans. These also often have low down payment options as well as long repayment options.
The amount lendable is between $5,000-$5 Million with interest rates starting at 5%.
These can take 30-45 days to get funded but can take longer dependent on approval by the government.
Note: There are several types of SBAs so ensure you understand the specific type you are receiving.
Commercial Real Estate Loans
Commercial real estate loans fund what they sound like, real estate. If you need to purchase or upgrade your property this one is for you. When borrowing this type of loan the property itself is often used as collateral meaning if you default on the loan they will take the property.
This loan amount ranges from $200,000 through $20 Million+. These terms are typically between 20-25 years with interest rates at 5% to 30%.
We often fund non-recourse loans for hotels, mobile home parks, etc. We specialize in this type of loan and wrote a full post on why this should be your first type of loan requested if you qualify.
Merchant Cash Advance
Merchant Cash Advances are actually not categorized as a loan. These are not payed back by interest. When you take out a MCA you are guaranteeing a percentage of your future sales back to the lender. This can be expensive money and should be a last resort.
MCA amounts can be between $5,000 and $250,000.
These types can be fully funded within three days and are the quickest money you can find.