4 types of loans that every business owner should understand

The ability to access capital is important to many growing small businesses, whether they are investing in infrastructure, increasing their inventories, or simply wanting to operate.

There are two main options that a company can use to raise funds: borrow or attract investors. Although both have their strengths, loans are generally more popular because they often require less external input to run your business, have tax-deductible interest payments with lower interest rates, and terms that can be determined based on expected receivables.

Loans to small businesses rose 10.4% in 2013 according to the US Small Business Administration. This progress should continue this year.

Despite this increase, the National Association of Independent Enterprises found that in December 2013, only 32% of small businesses were able to meet their borrowing needs. As a result, entrepreneurs can benefit from knowing more about maximizing their chances of getting a loan.