Just because there are not only banks that provide loans, a lot of other types of lenders with different requirements and varying guidelines are available in the market for business owners to approach. Apart from the traditional banks, there are other lender types that are important for small businesses. These lenders offer a wide variety of products and loan options that can be availed on its own or in combination with others.

If you have decided to get on with a loan but are not sure about several types of loans, who provide them, and would it be suitable for your business then below in this blog we have mentioned some of the most common types of lenders that you can learn from.

Small Business Administration Loans (SBA Loans)

This entity offers a variety of loan programs. These programs are planned carefully by analyzing each aspect of it so that they are up to the standards and financing needs of different business types. SBA is basically a government-held entity that doesn’t directly lends loans to small businesses; rather it works as an institution that sets guidelines for the loans that are actually provided by its partners. These partners usually comprise bodies like community development organizations, banks, and micro-lending institutions.

What SBA also does is that it guarantees that the loans would be repaid hence reducing the risk of its partnered lenders. Each loan program that is offered by SBA has its own specific requirements and guidelines.

Small business loans that are currently offered by SBA include 7(a) loan program, microloan program, disaster loans, and real estate and equipment loans.

Conventional Bank Loans

A bank is one of the most common types of the lender and offers low-interest rate with a faster loan application approval process. This is because there is no involvement of a federal agency. The repayment time, however, that this type of lender offers is shorter as compared to SBA and generally includes a clause related to the application of balloon payments.

Some of the loans offered by banks include working capital loans, equipment loans, lines of credit, and others.

Alternative Lenders

Businesses that do not have a steady financial stream and a strong credit history to show mostly opt for alternative lending sources. These lenders are therefore found attractive by small businesses as their requirements for approval are not very stringent.

Some of these lenders even offer a complete online procedure with approval decision made in a few hours and funds provided in the borrower’s bank account in less than five days. One downside that comes with selecting financing from these kinds of lenders is that they charge you high interest rates.

Alternative lenders provide financing options like invoice factoring, franchise startup loans, equipment loans, and others of similar kind.