When it comes to obtaining financing for a business, there are a variety of lenders and loan types to choose from. While traditional financing is the first option that comes to mind, private lending can offer significant advantages for certain types of businesses. Private lenders are typically more flexible in their lending requirements, and can often provide faster access to funding than banks. They also have a greater range of loan types and structures available, including asset-based lending and invoice factoring, which may not be offered by traditional lenders. Other types of loans available to businesses include:

• Term loans: A lump sum of money is provided to the borrower, which is then repaid over a set period of time (often several years) with interest.
• Lines of credit: A revolving credit facility is provided to the borrower, which allows them to draw on funds as needed up to a certain limit. Interest is only charged on the amount of funds actually borrowed.
• SBA loans: Loans that are partially guaranteed by the Small Business Administration (SBA), which can make it easier for small businesses to access financing. These loans can include a variety of structures, such as term loans, lines of credit, and commercial real estate loans.
• Equipment financing: A loan that is specifically used to purchase equipment, with the equipment itself serving as collateral for the loan.
• Merchant cash advances: A lump sum of money is provided to the borrower, which is then repaid through a percentage of the business's daily credit card sales. This type of loan can be relatively easy to qualify for, but can also come with high interest rates and fees.

Note that this is not an exhaustive list of all possible types of business loans, and each loan may have its own unique terms and requirements. Ultimately, businesses should carefully evaluate their financing needs and explore all available options before deciding on a lender and loan type that best fits their situation.

If you're weighing a bank against a private lender for a commercial mortgage or bridge loan, our mortgages and bridge loan page breaks down how that process works.

Frequently Asked Questions

Is private lending more expensive than a bank loan? It depends on the loan type and your qualifications — private lenders often charge more for speed and flexibility, but exact terms vary by lender and by borrower.

Can I use more than one type of financing at once? Some businesses combine a line of credit with equipment financing or an SBA loan, but stacking debt has real risk — talk to a lender about how multiple obligations affect your cash flow before combining them.

How do I know which loan type fits my business? Start with what the money is for — inventory and payroll gaps usually point to a line of credit, a big equipment purchase points to equipment financing, and real estate points to a mortgage or bridge loan.