The Advantages and Disadvantages of Small Business Loans

Even if you have a great business idea, finding the means to finance it can be very daunting. In this time where even businesses with good credit standing find it hard to find their needed capital, it is indeed very hard for those who want to get into a small business.

Photo: theherbcentre.co.nz

It is a good thing there is the Small Business Administration Loan, which encourages new entrepreneurs. However, you need to have a collateral, whether your home, car or equipment for the loan’s approval. You can even get a loan from the bank once the SBA guarantees the 75% of the loan. The major disadvantages of this loan lie in the interest rate, which is a lot riskier since they sold the loan to secondary market, and in choosing the right bank to handle the transaction.

Other options for small business loans include the home equity loan, investors, venture capitalists, credit cards, and even your friends and family; and though there may be risks involved in choosing one over the other, the most important thing is that you have the capital that you need to start your very own business.