A small business loan is an aspect of commercial financing given to businesses that qualify from online lenders, traditional banks, and credit unions.
Business owners can use these funds for a variety of business needs, whether they need to maintain operations, increase cash flow, or get their company off the ground. The most common small business loans are used for working capital, equipment financing, or real estate purchases.
Borrowers will receive funds in a lump sum or through a recurring credit line. Repayment is set for an agreed-upon timeline with the addition of interest and lender fees. Borrowers will make payments on daily, weekly, bimonthly or monthly payments until the debt is paid off.
It’s important to note that a small business loan is either secured or unsecured. Collateral is required for a secured small business loan to ensure personal assets are available in case of repossession. An unsecured small business loan doesn’t require any collateral but does require a personal guarantee, ensuring you assume responsibility for any debt that’s not paid off.