The signature scent of January is optimism: We will avoid processed food, learn Mandarin Chinese and log at least nine miles before dinner (likely wild salmon atop a quinoa-kale salad). But New Year’s resolutions become realities after taking the first step, whether it’s learning how to boil water or take the stairs. And sometimes, the starting point for achieving great things—or losing a few pounds—is an infographic.
Dealstruck, a crowdlending platform that specializes in small business loans, recently published an infographic comparing the basics of small business lending products. The company offers a term loan product and a line of credit product for businesses across a broad range of industries, with financing from $50,000 to $250,000.
The infographic’s categories—loan amount, timing from application to funding, use, term, payments and APR range—provide an easy way of “differentiating [among] urgency, loan size and business maturity,” according to Dealstruck’s blog post. Lenders featured are divided into three types: traditional lenders and the U.S. Small Business Administration (SBA financing and traditional bank loan), investment lenders (line of credit and term loans) and short-term lenders (factoring and merchant cash advance).
A few highlights:
- SBA financing offers the highest stated maximum loan amount, with an average of $330,000.
- However, it takes three to six months for timing from application to funding, the longest of the three types of lenders.
- A merchant cash advance has the most red flags, with terms of 3-12 months, daily payments of a fixed percentage of sales and equivalent APRs that are often 60-150 percent.
- But, it’s worth noting that this kind of short-term loan also has the shortest timing from application to funding, within a week.
- A line of credit and term loans are the two types of loans that most resemble each other, with the main differences in use and term.
- Factoring has the shortest term of the loans compared: usually 30 days.
- As another red flag, equivalent APRs are 30-50 percent, the second highest listed.
- However, there are no payments, as cost is 2-3 percent of invoices.
Click to enlarge infographic.