Below are some examples of Traditional Financing and when each is most commonly used:

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• Term Loan: provides borrowers with a lump sum of cash upfront in exchange for specific borrowing terms. Term loans are normally meant for established small businesses with sound financial statements.

 

• Lines of Credit: a preset borrowing limit that can be tapped into at any time. The borrower can take money out as needed until the limit is reached and as money is repaid, it can be borrowed again in the case of an open line of credit. Borrowers can adjust their repayment amounts as needed, based on their budget or cash flow. They can repay, for example, the entire outstanding balance all at once or just make the minimum monthly payments.

 

• SBA Loans: The Small Business Administration (SBA) is an autonomous U.S. government agency established in 1953 to bolster and promote the economy in general by providing assistance to small businesses. The agency offers a variety of financial resources for small businesses including microlending, or small loans that are issued to those who would not otherwise qualify for financing.

 

• Cash Advance Funding: a short-term loan from a bank or an alternative lender. Cash advances generally feature steep interest rates and fees, but they are attractive to borrowers because they also feature fast approval and quick funding.

 

• Invoice Financing: a way for businesses to borrow money against the amounts due from customers. Invoice financing helps businesses improve cash flow, pay employees and suppliers, and reinvest in operations and growth earlier than they could, if they had to wait until their customers paid their balances in full.