Subprime Business Loans Types

The main ones are summarily detailed below.

Private business loans

These are just loans which are given out by non-bank lenders. As opposed to fintech, the marketplace, and online lenders, private business lenders make up institutional investors that have an eye on companies with high growth, whether present or projected.

Asset-Based Loans

These loans require monetizing of assets on the borrowing business’s balance sheet, and pledging any of a number of things including real estate, to business machinery and equipment (somewhat similarly to subprime equipment financing).

Factoring

This is not technically a loan, but a means for small businesses to obtain working capital by selling their accounts receivable in return for immediate payment. A subprime credit risk company can easily get capital in this way.

Invoice Financing

This option revolves around unpaid invoices or accounts receivable and makes use of the invoice as collateral. The factoring company does not buy invoice; rather, it forwards a big chunk of its value to the borrower, takes a fee, and after receiving payment of the invoice, forwards the remaining portion to the borrower.

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