Most of the people in India posses a dream to establish his own business. But everyone are not able to afford the expenditure of purchasing or rent land, building the office set-up and the other prior costs of business. But Indian banks are always ready to help those people by providing them loan for business. These kind of loans are providing not only for establishing a new business but also renovate one’s existing business.
Among all type of loans available in India business loans stays in a high demand among people in India. The self-employed professionals like the Chattered Accountants, Doctors, Architects, lawyers are also able to take the advantage of these kind of loans. The business loans are broadly classified into two types, secured and unsecured.
Under the secured scheme the borrowers need to keep security to the lender. This type of loan is being provided against a very affordable interest rate and the borrower gets a big amount with a higher repayment period. On the other hand, under the unsecured kind of business loans, the borrower gets the loan amount without keeping any security to the lender. For the insecurity of get back the loan amount, the loan is being given with a higher interest rate. The repayment options are also short in this loan. From the perspective of loan provider, it is classified into two types. These are trade loans and the professional loans.
The trade loans are provided to the business persons and the traders for establishing or expand their business. Under this category one can avail the minimum amount of Rs. 25000 and the maximum amount can be Rs. 100 lakhs. The borrower will get business loan under this category with a very affordable interest rate and flexible repayment options. On the other hand, the professional loans are only provided to the self-employed professionals. The amount of the loan is depends on the repayment capacity of the borrower, financial position of the applicant, tenure of the loan etc. Indian banks provide a sum of Rs. 25,000 to Rs. 25 lakhs under this type of loan.
Business loans can be used to meet the operating expenses. New business owners also avail these loans for rolling their start-up capital or to build good credit standing. Apart from the types discusses above the business loans are also classified into some other types, these are : –
(1) Short-term loans, which are taken for fulfilling temporary needs of money. Business persons take these loans to protect various short-term problems which usually a business encounters. Banks gives these loans on the terms of repay it within one year. This kind of loan is very useful for the requirements of additional inventory finance and a high volume of accounts receivable. These loans help people to secure cash from market to start a new business or just to boost up the existing one. The short-term loan also can be of secured and unsecured types
(2) Long-term loans are taken to increase fixed assets of a business. These type of loans are also be given to start-up a new businesses. Under this category of loan the repayment period provided is from three years to five years
(3) Intermediate loans are one of the top preference of the entrepreneur to start their new business. Banks offer this loan for various business related activity such as to buy equipment, build inventory, increase working capital etc.
(4) Apart from all these loans there are Government small business loans. Except the government organisations, these kind of loans are also taken through some financial institutions