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Dianne Williams Wildt, MBA
Certified Retirement Counselor®
Since 1983 in the financial services and investment industry
Retirement Pathways, Inc.
4500 Bowling Blvd., Suite 100
Louisville, KY 40207
Phone: 502-797-1258
Email: dianne@retirementpathways.com
Website: www.retirementpathways.com
May/June 2022
Understanding Small Business Loans
Having significant debt is never a good business model. However, seeking funding to make your business more profitable may be a smart move. Start the process by reviewing your financing options.
Debt Financing
Loans from a financial institution are a common method of business financing. The lender assigns the loan terms, including the loan duration, monthly payments, and interest rate. Lenders have no control over your business decisions, and the loan interest is tax deductible as a business expense. If you’re taking on debt, make sure you have sufficient capital coming into your business to meet all monthly expenses.
Equity Financing
Equity financing comes from an individual or firm that invests in your business. You won’t have monthly payments and won’t have to pay back the funds, potentially leaving you with more cash on hand to grow your business. With equity financing, though, you’re giving up some percentage of ownership to the investor(s)—sometimes 50% or more. Unless you have an option to buy out an investor’s stake, the investor will continue to earn a percentage of your profits indefinitely.SBA-Guaranteed Loans
The Small Business Administration partners with lenders to offer guaranteed loans for most business purposes, including real estate, construction, equipment and asset purchases, business acquisition, debt refinancing, etc. Eligibility depends on the lender, but businesses that are unable to get financing elsewhere may qualify for SBA loans.Lines of Credit
Lines of credit provide access to funds as your business needs them, up to your account’s credit limit. They typically have a variable interest rate, and monthly payments are based on the amount borrowed. They’re appropriate for managing short-term cash needs and may be particularly useful for businesses with seasonable sales.Business Credit Cards
A credit card can help with buying items your business uses every day. Look for a card that offers cash back on purchases. Cards often have high interest rates and low credit limits, so pay off any balance when the bill comes.Friends and Family
Loans from relatives or friends may be another option. Present your business plan and draw up a repayment schedule.CONTACT US
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Investment advisory services offered through American Capital Management, Inc., a State Registered Investment Advisor. Retirement Pathways, Inc. is independent of American Capital Management, Inc.
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