If you are among the business owners who plan to seek financing in the next six months, here are five questions that can help you determine which loan is right for your business.

1. Do You Know How Much Money Your Business Needs?

The amount of financing you can access can depend on your organization’s credit score, average monthly sales, collateral, earning potential, length of time in business and other factors. Any of these variables can impact the amount of working capital your business qualifies to receive.

In some cases, you may not have an exact amount of business financing in mind. While a traditional business loan could still be an option, a more flexible financing resource like a business line of credit can give you more choices in determining how and when to access working capital.

2. How Quickly Do You Need Working Capital?

The length of time required to process your application varies widely. While traditional lenders can take weeks to make a decision, online lenders offer rapid answers and immediate access to capital when you’re approved.

Time is money. How quickly your business needs access to working capital can determine which option is best for you.

3. How Long Will You Need Access to Working Capital?

A long-term business loan or line of credit is often a good fit for organizations that need ongoing access to capital or that plan to use financing for capital improvements. However, short-term cash flow challenges and fast-emerging growth opportunities could point to short-term financing. According to platform lender Kabbage.com, short-term financing is most beneficial when you:

·         Experience a cyclical lull resulting in temporarily low cash flow
·         Need to hire extra help or stock inventory before your busy season
·         Are waiting to collect payment from clients
·         Incur unforeseen operational costs or emergency repairs

4. What Type of Repayment Schedule Is Best for Your Business?

Just as the application process varies widely by lender, so do repayment terms. When determining which loan is right for your business, you need to consider how repayment installments will affect your organization’s cash flow and how quickly you want the debt to be repaid.

For instance, a low monthly payment might mean your business carries debt for a long time, impacting your ability to obtain long-term financing. Conversely, a short-term business loan enables your business to repay the amount more quickly and reduce (or eliminate) debt in as little as six months.

5. Do You Have or Want to Leverage Collateral?

Even if you have assets to leverage against a business loan, you might want to avoid putting business assets at risk. Ask your lender if any of your business assets are at risk or how financing could impact your organization’s credit score. This can help you determine which type of business loan is most-suited to both its financial needs and preferences.

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Kabbage is dedicated to helping small businesses grow. With Kabbage, small business owners can qualify for a line of credit in minutes. We are trusted by more than 100,000 small business owners and have funded over $1 billion to further our support of the small business community.