Top 5 Funding Options for Businesses this 2021

If your business is open and still generating income, obtaining working capital could be extremely beneficial, either for the recovery or the growth of your business. This 2021 is an ideal time to create new sources of sustainable income that generate additional cash flow during unpredictable economic cycles.

Here's a simple guide to help you better understand when it comes to choosing the best option for you and the financial needs of your business.

1. Loans guaranteed by the Federal Small Business Agency

Another option to consider are the many programs provided by the Federal Small Business Agency (SBA). SBA loans are obtained through a bank and are guaranteed by the Federal Small Business Agency.

To obtain this type of financing, you must first find a lender that offers SBA loans (not all banks do) and then choose the most appropriate program, based on its terms and potential uses of funds. If you're not sure where to start, the SBA compiles a list of its most loyal lenders within the 7 (a) loan program (the most popular and versatile SBA loan program, as it can be used for almost any business purpose. ). These lenders will have the most experience with SBA loans, the application, and the process and will therefore be your top options for obtaining an SBA loan for your business.

The Advantages: SBA loans are guaranteed by the government and therefore offer longer repayment terms and lower interest rates. Its Average Percentage Rate (APR) ranges from 5.50% to 8%. And they typically offer larger amounts, from $ 30,000 to $ 5 million.

The Disadvantages: If you are looking to quickly resolve your business financing needs, you may want to look elsewhere. The SBA loan application process is time consuming. The requirements are very strict, only those with good personal credit (usually 690 or more), strong business finances and the flexibility to wait for financing should apply. Even if you qualify, funds may arrive too late - SBA loans can take a long time to secure.

2. Short and medium term loans

Short- and medium-term loans are another type of traditional financing product. Short-term loans typically have terms of less than one year and in some cases terms of up to 18 months. A medium-term loan generally refers to a loan with terms longer than one year.

The Advantages : For quick access to capital, short-term loans are often one of the best options. They are typically available through alternative online lenders, as their application processes are simpler and require minimal requirements. Eligibility varies by bank, your location, and available loan programs,