A Guide to Business Loan Options (And When to Use Them)

Whether you’re looking to get your business off the ground or into a bigger facility, business owners know that loans often come with the territory. Loans are an effective way to take the next step for your business, and there are more than a few options out there to choose from. It’s critical to know what makes each option unique, giving you the confidence to select the right one for you and your financial needs.

Below is a list of common business loan options (along with a few other financing possibilities), with some details about when it’s best to use each one.

Short-Term Loans

Ideal for when you need cash fast, short-term loans are smaller sums of money that can be repaid in a relatively shorter length of time (typically 18 months).

Best uses include: product-to-income gaps, seasonal business fluctuations, refinancing short-term debt, cosmetic upgrades, emergency expenses

Long-Term Loans

The big brother to short-term loans, long-term loans are larger in both loan amount and repayment schedule. These are typically for businesses that are established and looking to grow, and the requirements can be greater than that of short-term loans.

Best uses include: expansion, renovation, new or upgraded equipment, refinancing debt

Commercial Mortgages

Just like your own home, your commercial real estate is the home of your business. And likewise, it allows you to purchase a piece of property that you couldn’t otherwise pay for up front—when you’re ready to make the jump from renting to owning your place of business.

Best uses include: purchasing commercial real estate, expansion, renovation financing

Small Business Administration (SBA) Loans

Backed by the federal government, these loans can address a wide range of needs. SBA loans are ideal for entrepreneurs, start-ups and small-but-growing businesses, with reasonable rates and flexible repayment options based on what the money is being used to address.

Best uses include: permanent working capital, revolving funds, equipment, real estate, refinancing debt, disaster recovery

Industry-Specific Financing

Lenders often feature industry-specific options due to a strong history of work in that particular area. For example, Community Bank offers various financing options for agribusiness related to farms, cattle and real estate loans.

Best uses include: industry-specific expenses

Understanding your options as a business owner is the critical first step to making smart decisions when it comes to financing. However, that doesn’t mean you should do this on your own. Bring your ideas (and your needs) to an experienced business loan lender and let them fill in the gaps. The relationship with your lender is what can turn an idea into a plan.