Types of Loans
Working Capital Term Loan
This is a simple term loan that can range from 6 months to 2 years. Most businesses use this loan for marketing, payroll, to purchase inventory, fulfill contracts, and cover any daily financial expenses for your company. Working Capital is the money available to operate your company and is most commonly used to keep money in your business. Moreover, working capital is what your customers owe plus inventory plus your current cash minus what you owe to suppliers and your employees. Working Capital Loans should not be used to purchase assets or as a means of long term funding. Working Capital Loans are perfect if you are expecting a slow month in sales, you need cash to hire more employees, or want to support a contract. If your business needs quick financing, then a working capital loan is a top choice to consider.
Benefits
Allows you to be prepared for financial difficulties, you can use the money how you want, minimal paperwork, shorter terms, quick!
Cons
Weekly payments, some collateral required, higher interest rates
Business Credit Cards
Business credit cards are a convenient way to access a revolving line of credit to help finance your short-term needs. This revolving line of credit has a variable interest rate and includes charges if the balance is not paid in full for each billing cycle. Use Business Credit Cards to increase your purchasing power but take the time to compare your options and manage your spending.
Benefits
Easy Qualification, Convenient, Ability to better your credit, Easy online use
Cons
Personally liable, Higher interest rates, Ease of spending, additional fees for advances
Equipment Leasing
Do you need a piece of equipment, machine, or a vehicle for everyday business use? This loan product can be used for any type of equipment, new or old. Equipment financing uses the equipment as collateral to secure your loan and after the term of the loan you own the equipment.
Benefits
Low rates, longer terms, monthly or quarterly payments, minimal paperwork, option to purchase
Cons
Requires equipment as collateral
Line of Credit (LOC)
This business line of credit is similar to a credit card in that you use it as you need it. You can borrow and use more as your principal is paid down. A Line of Credit is intended to help a business meet their short term cash needs whether it is for operating expenses or additional inventory. This product is popular for small businesses that need a source of funds to draw from when needed.
Benefits
Only pay interest on the amount you use
Cons
The Line of Credit can be changed or canceled at the discretion of the lender
Merchant Cash Advance
A merchant cash advance provides you with upfront cash in exchange for future credit card sales. Usually a cash advance is for businesses with sufficient sales and little or poor credit who need additional capital to grow their business. A Merchant Cash Advance can help with your everyday operations, purchasing inventory, and any other business operations. This product advances you money quickly with minimal paperwork.
Benefits
Get money quickly, minimal paperwork, likely to be approved, good credit is not required, no collateral needed.
Cons
High interest rates, daily payments, fees
Factoring (AR/PO)
Accounts Receivable financing involves selling outstanding invoices or receivables at a discount to a specialized factoring company that will take the risk on the receivables and in return will provide cash for your business. The amount of value to the account will depend on the age of the receivable, which are usually no more than 90 days old.
Benefits
Quick cash, frees up working capital, no collateral, less risk
Cons
Can seem unfair, lose control of certain processes, cost, rate is based on your clients, contract length, not a collection service.
Commercial Real Estate Loan
Acquiring an income producing property? Is your business to fix-n-flip? Bloom can provide the capital you need for development or acquisition.
Benefits
Real Estate provides the collateral, low interest rates, can add-on Bloom’s real estate advisory service!
Cons
A little longer underwriting time, appraisal costs & legal fees.
SBA Loan
The Small Business Administration is a US government agency the assists the start and growth of small businesses. The SBA works with select commercial lenders that meet SBA guidelines to provide small business loans. The SBA is structured to repay a certain amount to a lender if a business defaults on its loan payments to the lender. In order to avoid these loan defaults, the SBA requires you to provide the following information in your loan package to the lender (Bloom):
- Resumes for each principle
- Business overview and history
- Ownership and Affiliation
- Loan Application History
- Business certificate/ license
- Business lease
- Business Financial Statements
- Profit and Loss Statements
- Income tax returns
- Projected financial statements
