A business loan is a business loan is a business loan.

Well, not quite. If you think that all business loans are created equal, then you better not walk into a bank anytime soon to apply.

Yes, you may very well have used your own money to start your small business. But let's face it; you don't want to stay quite that small forever, now do you? Eventually, you'll discover that your business is taking off and you may need to augment the growth by borrowing some money. Whether you need it to help with your cash flow during slow times and growing pains, need it to buy new equipment, hire new employees, or get a bigger office - it's always wise to know what your options are.

Indeed, there are several types of loans available to your small business. Knowing the difference between them before you apply can simplify the process - and improve your chances of approval.

The most common type of loan an enterprise can get is a short-term loan. This kind of loan usually consists of a repayment obligation of less than a year. It's ideal if your business is temporarily strapped for cash and is in need of some interim working capital.

Be careful, though. It's typically repaid in a lump sum when your inventory or accounts receivable are converted into cash.

An intermediate-term loan is quite often used to start up a new business. It could also be used to buy new equipment or to expand your business. You may even take out an intermediate-term loan to increase your supply of working capital. The repayment schedule attached to this loan is between one to three years.

A long-term loan, by contrast has a repayment schedule of three to five years. More often than not, this type of loan is acquired for major capital improvements or acquiring fixed assets. Sometimes, long-term loans are also used for a business start up. Repayment tends to be based on the life of the asset being financed and are made in either monthly or quarterly installments.

Lastly, your business may apply for a line of credit (LOC). This gives your enterprise the ability to borrow money over a period of time. Your business will be given a credit limit and can borrow from it, up to that amount, when you need it. You don't need to reapply for credit each time you use money from your line of credit. You do, however, need to stick to this limit and be sure to pay the balance in full before borrowing more. Otherwise the interest and total balance can add up quickly, and before you know it you can be overwhelmed and severely in debt!

With a LOC, the lender will probably review your business's status on a yearly basis in respect to this credit. At this time you'll no doubt be asked to provide updated financial statements on your business. As long as everything is in order, you should have no trouble having it renewed.

Knowing the difference among loans and business credit before you step foot in your banker's office will help seal your success. It's a big plus when you know what you're talking about and can show the bank you did your homework!