Whether you need money to launch your small business or short term capital infusion to help get over a slow season, a small business loan could help.

As long as there have been people striving to better their lives, there have been lenders willing to give them a leg up – in exchange for repayment with interest. If you want to purchase a family home but your credit isn’t top tier, you can still find home loans with bad credit.

If you’re buying your first car and you have a sizeable down payment, you can get financed for the rest. Or if your dream is to fix and flip homes for profit, there are hard money lenders in California that can help you to reach your goals.

What about starting or managing a small business, though? How can you secure the funding you need to open, sustain, or expand your small business? Here are a few tips to get you on track.

Reasons for Taking a Small Business Loan

There are a number of reasons why a small business might need a loan. Starting a business is an expensive undertaking, on par with purchasing a home in some cases. Most people don’t have tens or hundreds of thousands of dollars lying around to get their business off the ground.

Even if your small business is already up and running, you may need extra funding down the line to weather a slow season, launch an advertising campaign, or expand to a larger location and hire more employees. As long as there is a strong chance of return on your investment, it is worth seeking a small business loan to accomplish your goals.

Credit and Collateral

Just because you have a good idea that’s bound to make money doesn’t mean a lender is going to entrust you with their funds. They want to know you’re a safe investment and/or that they are guaranteed to recoup at least a portion of the capital they lend you.

For this reason, your loan amount and other terms will likely be based on two main factors: credit and collateral. Your credit score will get you in the door and potentially net you more favorable terms (lower interest rates, for example). However, you will almost certainly be required to provide some form of collateral, such as a property title, as well.

Short-term vs. Long-term Loans

If you’re buying a home with bad credit, you’re going to take out a long-term loan with a low interest rate that allows for small monthly payments. If, on the other hand, you want to flip houses, private money lenders in California can offer you short-term loans at higher rates with the expectation of speedy repayment.

Small business loans may be short- or long-term depending on what you need them for and how soon you anticipate a return on investment. Whereas a loan to open a small business may be long-term as you start earning money and determine how soon you can reasonably repay your loan, you may be able to pay off a short-term option for expansion a lot more quickly because your business is already established.