What Are the Different Types of Business Financing?

You’ve got the dream. You’ve got the drive. But do you have the dough? Business financing is what keeps your entrepreneurial engine running. Whether you’re a bakery in Brooklyn or a tech start-up in Tulsa, knowing your options can save you serious time and money.

Let’s Break It Down

Here are some of the most popular types of business financing, served up with a side of wit and wisdom:

1. Term Loans

• What it is: A traditional lump-sum loan with a fixed repayment period and interest rate.
• Why it’s great: Ideal for long-term investments like renovations, expansions, or finally replacing that printer from 1998.
• Who it’s for: Businesses with a solid track record and predictable cash flow.

2. Lines of Credit

• What it is: A revolving credit account you can dip into as needed, much like a credit card for your business.
• Why it’s great: Flexibility. Perfect for covering short-term needs, cash flow gaps, or surprise expenses (like your walk-in freezer walking out).
• Who it’s for: Seasonal businesses or those that need ongoing access to funds.

3. SBA Loans

• What it is: Loans partially guaranteed by the Small Business Administration. Kind of like getting a co-signer—except it’s Uncle Sam.
• Why it’s great: Low interest rates, long repayment terms, and relatively large amounts.
• What to expect: More paperwork than your accountant’s worst nightmare. But worth it if you’re patient.

4. Invoice Financing

• What it is: You sell your unpaid invoices to a lender in exchange for a cash advance.
• Why it’s great: Keeps the cash flowing when clients take their sweet time.
• Who it’s for: B2B businesses with reliable but slow-paying customers.

5. Merchant Cash Advances (MCAs)

• What it is: You get a lump sum now and repay it through a percentage of daily sales.
• Why it’s great: Fast access to cash without collateral.
• Caution: Costs can be high. It’s the espresso shot of financing—instant energy, but don’t make it your daily habit.

6. Equipment Financing

• What it is: A loan specifically to buy equipment, where the equipment itself is the collateral.
• Why it’s great: Preserves your working capital while still getting the tools you need.
• Who it’s for: Construction companies, restaurants, manufacturers—anyone who needs pricey gear to run their biz.

So Which One’s Right for You?

Think of it like choosing a Netflix show—it depends on your goals, timeline, risk tolerance, and whether you want quick results or something slow-burning and reliable.

Bonus Tips

• Don’t just chase fast cash. Look at the cost of capital and long-term impact.
• Read the fine print. Fees, penalties, and repayment terms can make or break the deal.
• Talk to a pro. Because sometimes the best choice is hidden in the small print—or between the lines of your business plan.
  
  

Ready to find the right funding fit? Viking Funding helps you navigate the sea of choices. Call 754-240-8620 or click ‘Apply Now’ to get started.