Business is an act where you sell products and services to a client and get an amount from then in return. This is inclusive of the profit made from such a transaction. We all work in some or the other business deal and get a profit out of it. There can be possibilities where the profit range can be reduced due to many parameters. It may also get you into losses due to the same parameters. However, all this boil down to one thing i.e. money. Business works on the monetary liquidity it has, to perform all its activities. This liquidity is attained only when you have sufficient funds to work in a business. If there is less of funds and you need them to continue your business, then you avail of a business loan. This loan is made available through many sources such as banks, financial institutions and even lenders who work on a personal basis. Let us look at business loans in general and get into its veins.
Business loan should be categorized, and you should look at it accordingly. There are many types of business loan and you should know which category you are eligible for.
Business Line of Credit - The lines of credit can be revolving and flexible so that you can enjoy the benefit and make maximum profits out of the loan proceeds.
Installment loans – Such loans are paid over a set number of payments that are scheduled when the loan is taken. Two installments are already paid over the loan and this helps to kick start the loan payment process. Timely payment of principle and interest is a must to continue such a loan as per the agreed timelines.
Balloon Loans – This loan is not fully amortized over the tenure and hence needs a huge balloon repayment at the end to repay the loan. Such loans have a lower interest rate and hence, are very popular.
Interim Loans – This type of loan is used to cover two transactions and close the loop. It is majorly used in a real estate transaction but is also popular in business as the deals may be incomplete in such as case.
Secured and Unsecured loans – These loans are different from each other in just one parameter i.e. collateral. If you have a collateral to back-up the loan, then it becomes a secured loan else it is unsecured. So, if your loan defaults, then your collateral is gone, but in an unsecured loan this does not happen. But in the latter the interest rate is quite high.
Letter of Credit – Such loans work on the letter of credit from the business. So, if you have a letter of credit from a bank which states that the payment due would be done on time and if this does not happen the bank is liable to pay the remaining amount serves as a great collateral in a business loan.
Short Term Loans – They are just like regular loans and the only difference is that the payment terms differ and work according to the lender needs. Since it is a short-term loan, it would need to be repaid in a span of 3 months to 18 months.
Equipment Financing – You can take an equipment loan from the lender to buy new tools for the business you run. This loan would have the equipment as the collateral as you would need the same for business purposes.
Invoice Financing – You can take a loan against the invoices that are outstanding in your business. The outstanding invoices can be used at 85% of the value so that you can get a good loan. In case if the invoices remain unpaid, you would be charged a factor fee which would be paid on a weekly basis.
Merchant Cash Advances – You can use all your merchant cash on daily basis to repay your loan proceeds. However, such a loan can be expensive for you as compared to the regular loans.
Credit Cards for Business – Such loans are not specifically a business loan as sit is over and above of the loans offered. If you get a loan of such sort, then it is a buffer as the payments needs to be done on timely basis else the interest added would be much higher than the principle amount and would also ruin your credit score.
|Bank/NBFC||Intereset rate||Loan amount||Processing fee||Tenure||Target age group||Servicable location||Salary bracket||Commercials offered||Credit score||Employment type||Product type|
|Lending Kart||(18 - 30)%||50,000 - 1 Cr||At 2%||18-65||Pan India||12 lakhs annual turnover and above||Slab wise, 50L - 3CR: 1-2%||660 (560-660 will could be considered on case to case basis) + NTC||Self employed||working capital loans and business loans|
|Axis Finance||(12 - 18)%||Min: 50K max 50L||2% on loan amount + GST||Upto 60 Months||21-60||Pan India||Tier 1: 25K, Tier 2: 20k, Tier 3: 15k||1.5%||650 min , actual >720 (V3), CIBIL>750||Salaried||Personal Loan|
|ICICI||(10.5- 19)%||50,000 - 25 Lacs||Upto 2.25% of loan amount plus GST||12 to 72 months||23-58||30K+||1.1% Per disbursa;||750+||Salaried||PL|
|NIRA||5,000 - 100,000 INR||350-750 depending on the loan amount||3-12 months||21-55||Pan India||12000+||1500||660+||Salaried||Short term loan|
|Muthoot Finance||1Lakh metreo , 50 k Non metro - Max 10 Lakhs||14.5 - 25%||12-60 months||23-60||Pan India||20K - 25K||1.75% Per disbursa;||750 & -1 & NTC||Salaried||Personal Loan|
|Home credit||25,000 - 200,000 INR||0% - 5%||19+||INR 10,000||1.4 % CPD||670+ credit score||Salaried and self employed|
|Bajaj Finserv||13%||upto 4.13% on loan amount + Taxes||3-36 months||23-55||Pan India||25K + Tier 2 35K + tier 1||650+||Salaried and self employed||PL/BL|
|Fulllerton||(11.99 - 36)%||0-6% Loan Amount||upto 60 Months||21-60||20K + Tier 2 25K + tier 1||750+||Salaried||PL|
Calculate your personal loan EMI amount:
Now meet your financial needs with a pro-active decision. Choose your lender & required loan amount for your loan application the better way:
Personal loan amount based on your salary:
Your monthly payout - EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
A business loan is credit given to a business entity or an entrepreneur to perform many types of transactions in the business environment. You need a loan to pay off your pending dues or salary to the employees. You may even need it to buy raw material or machinery to make profits in the future. All this is made available at an interest rate which is charged by the lender in lieu of the amount loaned. A business loan would need to be backed by a collateral of the same or lesser value as a security. This would be used by the lender in case if you are unable to pay your monthly installments over a period to sell off and settle the dues completely.
A business loan is available through many lenders and you need a few things before you could apply for one. Let us look at them in detail. You need all the documents related to your business so that it can be authenticated and a base for the loan records can be prepared. The loan amount that you are planning to take would also be taken into consideration if it is possible for you to return as per the agreed timelines. All these would help the lender to take a decision if you are eligible for a loan and if yes then for what amount.
Business loan terms are straight and simple. They need you to provide a loan guarantee in the form of a collateral and a guarantor in case if the loan goes into a bad debt. This is the necessity of any business loan. It is to keep the interest of the lender secured. The business of a lender is to give you a business loan and then work for getting its interest as per the agreed rate. Your documents should be worthy of the loan amount you expect to get. This would help the lenders to be as relaxed as possible.
Business loans that are low in interest and high in tenure are good for your business. However, you can also look at a lower tenure as this would reduce the cost of the loan. You should be able to judge what type of business loan is the best for you as it would help you in your successful business growth.
Anyone who has an income which can sustain the repayment policy of the business loan can apply for a business loan. You should also have the collateral of the loan amount you wish to apply for.
You can get a business loan for a startup in India with simple steps. You can apply for such a business loan with ease through banks and financial institutions who invest on the idea of the startup and not on the facts and statistics of the current business plan. You can also get a business loan for startup from governments. If you do so, you can get a repayment term of 7 years from the date of loan application disbursement.
Business loan can be applied by visiting the bank or financial institution or by logging on the official website. It is easy to apply for a business loan with the help of all the documents that are needed. It eases and quickens the process of a business loan application.
You can also compare the business loan with a personal loan, home loan and you may also compare the best credit card offers to know if your business loan is good enough for your business needs.
Small business loan rates are usually between 8-12% and can vary depending on the kind of relationship you have with your bank or the lender.
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