Loan Types Decoded: Which One Fits Your Business Goals?
November 25, 2025
When your business needs extra funds, choosing the right loan can make all the difference. At Redwood Credit Union, we know every business is unique—so the financing solution should fit your goals, not the other way around. Here’s a simple guide to help you understand common loan types and when they might be the best choice for your business.
Term Loans: For Big Investments
A term loan is a lump sum of money you borrow with interest and pay back over a set period, usually with fixed monthly payments.
- Best for: Buying equipment, expanding your location, or making other large, one-time purchases.
- Why it works: Predictable payments make budgeting easier, and you can lock in a fixed rate.
Business Lines of Credit: For Flexibility
Think of a line of credit like a financial safety net. You’re approved for a set amount, and you can draw funds as needed—only paying interest on what you use.
- Best for: Managing cash flow, covering seasonal expenses, or handling unexpected costs.
- Why it works: You have quick access to funds without taking on debt you don’t need.
SBA Loans: For Growing Businesses
Small Business Administration (SBA) loans are government-backed, which often means lower down payments and longer repayment terms.
- Best for: Businesses that need affordable financing for expansion or equipment but don’t qualify for traditional loans.
- Why it works: SBA loans can make borrowing more accessible and affordable for small businesses.
Equipment Financing: For Tools That Power Your Business
Need new machinery, vehicles, or technology? Equipment loans are designed for that. The equipment itself often serves as collateral.
- Best for: Businesses that rely on specialized tools or vehicles to operate.
- Why it works: Keeps your cash flow intact while upgrading essential assets.
Commercial Real Estate Loans: For Owning Your Space
If you’re ready to buy or refinance a property for your business, this is the loan for you.
- Best for: Purchasing office space, retail locations, or warehouses.
- Why it works: Builds equity in your business property instead of paying rent.
Choosing the right loan starts with understanding your business priorities. Ask yourself: Is your goal growth, stability, or flexibility? How much funding do you need—and for how long? And most importantly, can your business comfortably manage the repayment terms? These questions will help guide you toward the best fit for your needs. Redwood Credit Union is here to help you review your options and find a solution that supports your business goals.
At Redwood Credit Union, we’re here to help you find the best fit for your business goals. Ready to explore your options? Contact our Business Services team today and let’s make your next big idea happen.
PPP Forgiveness Application Deadline
Congress passed The Economic Aid Act which changed the deferment period from 6 months post covered period to 10 months post covered period. For example, if your covered period ended June 30, 2021, under the new guidelines the earliest your first loan payment wouldn’t be due until April 2022, and you have until then to request forgiveness. Please use the following calculation to help you identify when your forgiveness will be due:
- PPP borrowers may select a covered period anywhere from 8 weeks to 24 weeks.
- RCU is automatically calculating your loan due date based on a 24-week covered period, if you intend on using a shorter covered period please inform us immediately as this will impact your due date.
- Your correct deadline will be reflected in your online banking account.
If all or part of your PPP loan is not forgiven, your first loan payment will be due the first of the following month after a decision is made by the SBA.
Leaving Our Website
You are leaving our website and linking to an alternative website not operated by us. Redwood Credit Union does not endorse or guarantee the products, information, or recommendations provided by third-party vendors or third-party linked sites.
