5 Types of Loans you Never Knew Existed

Written By: Lisa Published On: 27/06/18

Access to funds can be the great gatekeeper of opportunity. Fortunately, there is a wide variety of ways in which people can access the money they need at the time that they need it. Whether you’re a business looking to expand or an individual trying to make a big purchase, the following financing options might be able to help.

Interim Loans

When contemplating an interim, or, “temporary” loan, the bank’s primary concern is the ability-to-pay of the person or business requesting the loan. It is also the bank’s responsibility to take precaution if the commitment is substantial. Interim credit loans

are typically obtained for short-term financing purposes of renovation and real estate deals in order to cover the remaining buying price.

Line-of-Credit Loans

This is the most useful type of credit for small business owners, as it protects the business from stalled cash flow and emergencies. Line-of-credit loans are for the purchase of supplies, payment of operating costs, and supplementing your working capital. They are not designed for the purchase of real estate or equipment.

To get a line-of-credit loan, your banker will require your current financial statements, projected cash-flow statement, and most recent tax returns.

VA Mortgage Loan

According to Low VA Rates, the purpose of the VA loan program is to help our nation’s veterans obtain adequate housing on better terms than they could get anywhere else. Basically, this is a federally insured mortgage loan for veterans. It does not require down payment or private mortgage insurance. There are no individual mortgage insurance requirements, as the VA offers less restrictive credit requirements. However, private insurance is required if a down payment of 20% is not provided.

Secured and unsecured loan

Loans can come in two forms; secured or unsecured. Unsecured loans are approved without the use of collateral. Entrepreneurs qualify for the loan based on their income and credit history. A secured loan requires some collateral, but it usually has low interest, unlike the unsecured loan.

Letter of credit loan

Mostly used in international trade, the letter allows all entrepreneurs to assure payment to their suppliers in other countries. The document is an alternative to the bank’s credit for the entrepreneur up to a set amount for a specified period.

If you’re an entrepreneur or small business looking for startup funds, check out the suite of carefully tailored financial products that we offer.

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