When you're starting up and are not quite there financially you may be considering taking out a loan. There are many different options to consider, such as where, type, duration, and repayment. But before you sign on any dotted line you will want to list down your needs, have a solid budget written out and you should be familiar with the terms involved in the loan you will be signing up for. The more you know, the less nasty surprises you will encounter later down the line. Learn more about loans and what they involve, and what all those terms mean.
Types of Loans:
Small Business Loan (SBA)
- A loan designed for small businesses already in operation needing financial help for operation.
- A loan structured for start up costs for businesses newly operating or about to operate.
- A secured loan is a loan that is backed by capital (items/goods of value) of the borrower.
- An unsecured loan is a loan that is based on the credit score/ credit worthiness of the borrower.
- What the lender is charging you for the loan, this is normally a percentage over the term of the loan.
- The duration of a loan.
- Fixed Rate: Means that the interest rate of the loan will remain the same for the entire term of the loan.
- Variable Rate: Means that the interest rate of the loan can and will change throughout the term of the loan, this is normally dependent on the market/bank/lender's rate.
Click here for a useful glossary on bank/lending terms arranged by alphabetical order.
*Rates and conditions on all financial products, change frequently so ensure you have a contact on hand, (that you are comfortable with) of the financial institution you do business with so you can keep up to date and have your questions answered when they arise.
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