“Cash is king,” the old saying goes. Business owners know the truth of this saying all too well. Without steady cash flow, even businesses with strong sales can encounter financial difficulties, including bankruptcy.
Many businesses seek outside financing in order to avoid cash flow snags and the resulting financial problems they can lead to. The good news is that there is a wide range of different types of business loans available that can help you meet your financing challenges.
Business Loans of All Types
The most common types of business financing are business loans and lines of credit from commercial banks and credit unions. In addition, there are a number of nontraditional business loans that you might not be familiar with.
Here are a few small business loan options that you might not have heard of before:
Minority Business Loans
Minority business owners sometimes deal with unique challenges when it comes to starting and growing a small business. Fortunately, there are a number of business loans designed to help minority owners meet these challenges.
One of the most common sources of minority business loans is the U.S. Small Business Administration (SBA). Among the most common types of SBA loans available to minority owners are SBA 7(a) and 8(a) Business Development Program loans, SBA Community Advantage loans and SBA Microloans.
Other types of loans designed to help minority business owners include the following:
Business Center for New Americans loans: This organization provides business loans of up to $50,000 to immigrants, refugees and other minority entrepreneurs who can’t obtain traditional business loans but can demonstrate the ability to repay loans.
Accion U.S. Network loans: This is an international microloan organization that makes loans of up to $300,000 to low- to moderate-income business owners, including minorities.
Union Bank Minority Small Business loans: This bank’s Business Diversity Lending Program makes business loans of up to $2.5 million to qualifying minority owners whose businesses have annual sales of up to $20 million.
Veterans Business Loans
Like minorities, veterans may also face unique obstacles to business ownership. There are several financing options designed to help veterans overcome these obstacles to successful entrepreneurship, including the following:
Veterans Advantage: This SBA loan program offers veteran entrepreneurs the chance to borrow business funds at reduced fees. It’s available to honorably discharged and service-disabled veterans, reservists and active National Guard members, as well as their current spouses and the widowed spouses of military members who died while in service.
Veterans Business Fund: This is a non-profit organization through which donors provide funding to make business loans to military veterans in order to start or expand an existing small business.
Hivers and Strivers: This is an angel investment group that provides funding to new small businesses started by veterans who graduated from a U.S. military academy, such as Annapolis or West Point.
StreetShares: This veteran-owned and operated lender makes business loans of up to $250,000 available to veterans via an online auction marketplace that connects investors with veteran business owners.
Military Reservist Economic Injury Disaster Loans: This is an SBA sponsored loan program that’s designed specifically for military reservist business owners who were called into active duty and whose businesses suffered financially as a result. It offers low-interest loans to help these businesses recover.
Women-owned Business Loans
Nearly half of new entrepreneurs in the U.S. are women, according to Kauffman. However, only one in four women business owners applies for financing, according to Fundera. There aren’t any business lending programs designed specifically for women entrepreneurs, but here are a few small business loans that many women business owners have found to be beneficial:
SBA loans: The SBA guarantees repayment of a portion of these loans, which enables lenders to lend money to women-owned businesses that might not qualify under normal loan underwriting criteria. Among the most popular SBA loan programs are the Standard 7(a) loan, 7(a) Small Loan, 504 loan, SBA Express and Export Express loans.
Microloans: These are a good financing solution for women business owners who only need small sums of money or who don’t yet have a long enough business history to qualify for traditional business financing. Microlenders such as Accion, Kiva, Grameen America and the Opportunity Fund make small business loans typically ranging from $10,000 to $50,000.
Online loans: Many different online lenders have emerged in recent years that specialize in making low-documentation loans to small businesses, including those owned by women. These include OnDeck, Kabbage, Lending Club and Funding Circle.
Small business grants: Grants are better than loans because the money doesn’t have to be repaid. The federal, state and local governments, as well as some private organizations, make grants to many women business owners who are willing to put the time and effort into the grant-writing process.
Business Loans for Felons
Those who have been convicted of felonies sometimes attempt to restart their lives after prison by launching a small business. The SBA may be a good source of financing for these entrepreneurs because being a felon doesn’t automatically disqualify an entrepreneur from being approved for an SBA loan.
In addition to the SBA, other possible sources of business financing for felons include online loans, microloans and fundraising sites such as Kickstarter and GoFundMe.
Do Your Due Diligence
If you are an entrepreneur and you fall into one of these categories, spend some time investigating these unique small business loans. One of them might provide the financing you need to grow your business and overcome financing challenges.
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Meeting the Challenge of Funding Business Growth
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