How a Business Loan Can Keep Your Enterprise out of Trouble?
The biggest question to answer when you apply for a business loan is how that amount is going to be useful for your business. If you do not have a definitive answer to that particular questions, perhaps you should hold-off getting a business loan.
The way a business loan can help your business depends on what type of financing you are considering. It also depends on the type of your business and its overall financial health. To get more insights into the matter of business finance and its impact on your business, let us have a look at the type of business loans which are helpful for your business.
A term loan is the traditional loan which is acquired through a bank or a non-banking financial company to address your capital needs. The loan includes a principal amount and the interest that you will pay-off over a period of time. A term loan is usually given for a period of 1 year to 5 years. Term loans often have lower interest rates than short-term business loans due to the longer repayment cycle and less risk for the lender.
Short-term Business Loans
Next up is the above-mentioned short-term loan which is a condensed version of a term loan. The duration of these loans ranges up to 18 months and they have a slightly higher interest rates due to the reduced repayment window and higher risk involved for the lender. However, short-term loans do give you the advantage of repaying your debt faster and getting more lenient credit terms on your next loan. Short-term finance is also a great way to improve your business credit score quickly.
These loans are approved for the purchase of critical equipment for a business. In most cases, the purchased equipment also works as the collateral or security for the amount due. An advantage of equipment financing is that you can secure up to 100% of the equipment value as a loan. Since there is collateral involved, equipment financing also gives you the advantage of lower interest rates on your business loan.
Some banks and NBFCs offer their trusted customers with a line of credit. It allows the partner businesses to withdraw sums in excess of their current business account balance. The excess amount, up to a limit, is considered a loan and attracts interest. The facility of credit is restored once the customer repays the overdraft amount with interest. This is quite useful for small businesses who have unstructured cash-flow from invoices.
How these loans help your business?
- Term loans offer easy repayment and a relaxed repayment period in excess of 1 year. These are high-value loans and hence allow you to make large investments for growing your business.
- Short-term loans offer quick finance for a limited period of time and are great for smaller expansion plans, streamlining working capital and taking advantage of immediate business opportunities.
- Equipment financing lowers the cost of upgrading your production lines and hence help you save time, increase the quality and quantity of production and create goodwill for your business.
- Revolving credit or line of credit is more of a fallback mechanism when your business needs that little bit of extra funding to manage production and sales channels.
All-in-one business loans from Lendingkart
Lendingkart Finance offers all-in-one business loans which include the benefits offered by term loans, short-term loans, equipment financing, and revolving credit. Lendingkart offers business loans up to 1 Crore for a period of up to 1 years for eligible businesses. The loan terms are decided through business analytics, which means that you get the best available rates as per your business type and recent financial performance.
Lendingkart business loans also allow you to select flexible repayment options such as bi-weekly or monthly installments to service your loan. Furthermore, you can choose to repay the entire loan without any prepayment penalties after the payment of first EMI or bi-weekly installment.
Benefits of Lendingkart business loans in comparison to the loan products listed above.
- High ticket value of up to ₹ 1 Crore with a 1-year repayment window to match the benefits offered by term loans.
- Ticket value starting at ₹ 50,000 to give MSME borrowers the option of small-ticket short-term finance of 1-12 months. The difference in minimum and maximum ticket size also increases the probability of getting institutional finance for SMEs.
- Once again, the higher ticket value and unsecured nature of Lendingkart business loans means that your business can acquire costly equipment without the risk that comes with collateralizing your business finance.
- Auto-renewal of business loan amount upon full-repayment without any additional documentation or processing charges. Meaning, Lendingkart business loans can act as revolving credit, that is higher than an overdraft facility, for your business.
Other benefits of Lendingkart business loans include, online only application and approval process which reduces the turnaround to just 3-days, and minimal processing charges of 1-2% based on the principal amount of your loan. Interested? To apply for a business loan, visit us today, at www.lendingkart.com.