Before making that leap, it is best for small business owners to understand the different types of small business loans available for them to kick-start their business or boost their existing one.

Unsecured business loan – This requires no collateral and can be paid within a maximum of 12 months. Backed by the borrower’s creditworthiness, a lender only needs a six- to 12-month bank statement to check the borrower’s trading history. The money can be used to promote the business and pay for taxes and other business needs.

Equipment finance – A type of financing used to acquire business-related equipment.

Short-term business loan – This provides business owners easier access to capital, covers cash flow gaps, or pays off higher-interest debt and other emergencies.

Bad credit business loan – Perfect for small businesses with credit defaults in the past. Lenders would look at the business’s strength, operating history, revenue, potential and other operational factors when availing of this loan.

Supply chain finance – A short-term loan that can optimise cash flow by enabling buyers to extend their payment terms while giving suppliers the option to be paid earlier. This is both beneficial to the business owner (buyer) as the extended payment terms help lower working capital requirements, while the supplier can obtain quicker cash flow at preferential interest rates, allowing them to get payments earlier and at a lower cost.

Low-doc business loan– Created for business owners who do not have enough proof of their business income. Ideal to finance short-term financial needs or long-term expansion plans.

Business line of credit – This works like a credit card in that businesses can borrow up to a certain limit for a quicker access to business funding.

Invoice discounting – This gives the borrower instant access to money with outstanding invoices or unpaid accounts receivables as collateral.