1. Short-Term Credit where repayment period is less than 1 year:

Revolving Debt - A type of credit where loan is approved for a specific period of time. Money is withdrawn against a pre-approved loan amount, referred to as a line of credit. Once the loan amount is paid off, your business can use and re-borrow against the line of credit as needed during the approved time period.

Contract Financing - If your business has a large contract, this type of credit will assist you to secure the financial resources in delivering the contract. The lender will determine the direct costs associated with producing the product or services and how much money is needed to fund the costs. The contract will become the security for the loan when the application is approved.

Bridge Financing - A type of loan to fill a gap between the completion of a permanent financing arrangement and the receipt of future financing. This loan runs only for a short period of time.

2. Long-Term Credit where repayment period extends beyond 1 year:

Term Loan - Loans that are amortized and re-paid over a fixed number of years. The repayment periods, ranging from three(3) through ten(10) years, can vary among lenders. The interest rates can be fixed or variable depending on the level of risk the lender attaches to the loan transaction. Real Estate loan is a type of term loan but the repayment generally extends beyond the normal term loan.

Equipment Financing - Business equipment purchases can be financed using term loan or lease agreement. Typically, the business is expected to contribute a small portion of the price of acquiring the equipment. The lender finances the remaining portion of the price of the equipment. In some lease agreements, the remaining portion is not financed. A residual buy-out amount will have to be paid at the end of the financing period. On this type of financing, the loan amount is directly tied to the value and expected life of the equipment. The equipment also serves as the collateral of the loan or lease agreement.

Real Estate Loan - A type of term loan where the repayment period is usually longer because of the value of the property. Business real estate or referred to as commercial property, is often financed over a 10 to 25-year period. Loan payments include principal and interest and the loan amount is amortized over the life of the loan. Many lenders offer business real estate loans between 65-75% of the property value. The real estate loan is considered less risky since the commercial property is recorded as a mortgaged property. The mortgaged property gives the lender a lien on the real estate as collateral for the loan.

3. Credit Card:

Unsecured Credit - No collateral but high interest-bearing. The business owner does not pledge any tangible assets as collateral. Revolving credit or charge account card is one example of unsecured credit.

Secured Credit - Need to pledge a collateral such as savings account or valued asset. The business owner pledges assets as security to protect the lender in case of default. Vehicle loan is one example of secured credit where the vehicle title is pledged to guarantee repayment.

4. Personal Loans:

From Family Savings - Business owners often use this type of credit to finance some business cash requirements. Lenders look more favorably on owners who invest in their business since the owners manifest a commitment by using personal funds for the business.

From Banks - Business owners avail of personal loans from banks to finance business cash requirements. Normally, a commitment of the owner's personal savings is tied with the personal loan.

5. Trade Credit:

Credit From Suppliers - This is the type of credit the suppliers give to the business owner for purchasing their materials or services. The credit comes in the form of suspending payment for the goods or services delivered by suppliers under a term ranging from 15 to 30 days. This type of credit is a significant source of external financing especially when the business is experiencing expansion in sales and subsequently increased material purchases. The owner can minimize business cash requirements by extending the term to pay suppliers beyond 30 days as an example. The owner can also request the suppliers to increase the amount of credit the business can have to purchase their goods or services.