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How to Guides | 04.10.18

Business Loans Explained.

There are a wide variety of business (commercial) loans available in the market. These loans are typically used to finance a business’s major capital expenditures (e.g. equipment) or its operating or expansion costs. Different types of business loans are available to suit different purposes. They can be complex and multi-faceted, as well as long term or short term. In this article, we’ll provide you with an overview of the most common types of business loans, along with their pros and cons.

What types of business loans are available?

An unsecured loan on the other hand requires no underlying asset to be provided as security. Unsecured loans therefore pose potentially greater risk for the lender, and as a result tend to have a higher interest rate.

1) By taking a secured loan using the equipment itself as collateral.

2) By hire purchase. Under this form of financing, the lender retains ownership of the equipment and allows you to use it. When you make your last repayment, ownership of the equipment transfers to you.

3) By leasing. Leasing is similar to hire purchase, except that there is no transfer of ownership at the end of the lease.

As you can see, there are a variety of business loan options available. To choose the best one for your business’s needs, you need to consider the purpose of your finance, whether your needs are short or long term, and the pros and cons for the various options available.

When making an application, your chances for approval will be better if your business has a good credit history and you can demonstrate your ability to make the necessary repayments.

To help you navigate your business financing, Tomorrow Finance offers a business loan comparison and referral service. Working with Australia’s leading banks, we’re committed to helping Australian businesses find the right financing option.

To speak with our experts, phone 1300 754 562 or contact us online. There’s no obligation and our service is 100% free!

Back « Applying for a small business loan.

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