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Looking for a Business Loan ?

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Business Loan

Businesses require an adequate amount of capital to fund startup expenses or pay for expansions. As such, companies take out business loans to gain the financial assistance they need. A business loan is debt that the company is obligated to repay according to the loan’s terms and conditions.

What are the different types of business loans?

Here are some common types of business loans you can get:
1. Term Loan

A term loan is a common type of business financing. The loan could be secured or unsecured. The amount accessible is determined by the credit history of the company, while the term ranges from 1 to 5 years for unsecured business loans and up to 15 to 20 years for secured company loans. A term loan is mostly used for capital expenditures. The authorized funds are disbursed in one lump sum by the lender.

2. Start-up Loan

A start-up loan is intended for budding businesses. Due to lack of business experience, applicants for such loans may not have a strong credit history. As a result, the lender factors in the borrower's personal credit history and the company's credit record when determining the loan's application. Turnover data and other factors are also considered when determining the loan amount, term, and interest rate. The company must be set up and running and the applicant must provide evidence of its existence and licensing.

3. Working Capital Loan

Working capital loans are small business loans used to cover the shortfall in cash needed to run a business. It creates the essential cash flow balance to run a business. This loan can cover a cash shortage during the off-season or to meet consumer needs during busy seasons. Service providers, producers, distributors, merchants, and traders involved in exports and imports commonly avail of working capital loans. Some banks offer unique business lending programmes for women entrepreneurs. Even the Indian Government has programmes in place to promote women to start small and medium-sized enterprises. A customizable loan amount, discount on conventional interest rates, and faster application process are advantages of specialized loans for women entrepreneurs.