Loans are very important for businesses, whether you need money to start operations or expand the business. Nowadays, many lenders are ready to give you a small business loan. But with the many types of business loans, how do you ensure you choose the right one? Here is a guide to assessing small business loan options and picking the right one.

Know That You Will Not Qualify for All Types of Loans

Just because there are different types of small business loans does not mean you will qualify for everything. For instance, to qualify for a term loan, you need to prove that you have been operating for the past year and proof of revenue. If you are just starting and are yet to open doors for customers, you can use a business credit card, as other loan options may not be available to you.

Most first-time business owners looking for cash to finance their startups opt for personal loans, especially if they have good credit scores.

Consider Each Loan Type and the Terms and Requirements

Find out what the terms and requirements are of each loan type as well as your needs. Some of the things you need to pay special attention to include:

Loan terms
Interest rates and whether they are fixed or variable
Borrowing limits (both the maximum and minimum)
Collateral requirements
Extra loan fees (this includes fees charged for early repayment, monthly maintenance fees, etc.)

Pay Attention to The Type of Collateral Required

It is important to check whether a loan requires a Uniform Commercial Code (UCC) lien or a personal guarantee. This lien offers a lender some rights over the business’s assets if you fail to pay the small business loan. A personal guarantee indicates you are responsible for any debt you incur on the business. Most lenders, including credit unions and banks, require a personal guarantee.

This information allows you to know which options are right for your business. If you have assessed your loan options and are ready to get business financing, reach out to TCF Capital. We have a variety of loan products to help your small business expand. Call us today and let us discuss those options.