Business Loans for Different Small Business Types
Every business is not the same, most of them flourish and many of them struggle. There are thousands of reasons why a business owner goes for a loan may it be expansion, growth , Equipment and tools upgradation or staff recruitment. Different loan types serve different purposes. A business is all about risk and unseen future and this future carries a lot of opportunities. To grab these opportunities a business owner has to be ready with all the resources.
There are different kinds of loans that fulfills different purposes of the business owners.
Working capital loan
Merchant cash Advance
Start up Loan
Business Line of credit
Business credit card
Loan against property for SME
This is the most customary type of loan that is availed by the business owners. This type of loan is basically categorized into unsecured and secured type of loan. The repayment time limit of unsecured loans ranges from 1 to 5 years and for secured loans this limit exceeds to 15 to 20 years.It is a regular type of loan, rate of interest charged under these loans may be on a fixed or floating basis.They are mostly availed by the business owners and individuals as well.
Term Loan can assist business owners in acquiring business working capital, purchase more equipment, recruit additional staff or carry on business activities.
Working Capital Loan
Whenever a business owner finds it difficult to manage the cash needed for operating business activities, he/she goes for a working capital loan. This type of loan brings back the sustainability in the business operations and revives cash flow of the business. In the absence of sufficient working capital a business may lose its efficiency. This type of loan does not expand the business but provides the necessary support to the business owners. Working capital loan does not ensure the long term stability of the business and is availed to fulfill short term loan.
Equipment Loan Financing is an exclusive type of loan for upgradation or purchasing new machinery. While availing Equipment loan a business owner does not need to worry about the downpayment as the machinery purchased acts as a collateral security. To meet up the demands of the consumer a business owner has to keep its equipment and tools updated and upgraded, for upgradation of machinery a huge funds are required. Equipment financing keeps a check on the depreciation of the machineries.
Merchant Cash Advance
It's more of a cash advance than a loan. It is given on the basis of the credit card sales deposited in a business’ merchant account. Before Merchant Cash Advance a business owners risk is evaluated and weight credit criteria is checked. The only thing that is checked is credit card receipts to ensure that the business is able to repay the loan amount. It is a loan offered against future loans.
Invoice Financing also known as invoice factoring or Invoice discounting. Invoice Financing refers to the process through which businesses can avail advances against outstanding invoices from their customers. This type of loan is mainly to reduce the gap between the invoices and receipts of the payments. Small business sectors mostly go for this type of loan. Depending upon the requirement there are two types of Invoice Financing i.e Invoice Discounting and Invoice Factoring.
Start up Loan
This type of loan is for the newly established companies or startups. A new company does not have a credit report and financial history. A start up loan can be provided with minimum restrictions and very less documentation. It is well understood that a new company requires a lot of funds to initiate its activities. A good amount of capital can help you kick your business activities. A start up loan can really act as a booster to avail the the benefits and opportunities of the business field.
Business Line of Credit
It is considered one of the best choices to support your small business. A line of credit is a predetermined amount of funds that you can borrow from when you need to and pay back later. It is different from a short term loan as you can use the funds up to the limit and the amount is then repaid and make them ready for their use again.
As the term denote the business owners are allowed to use the funds beyond the limit of the balance. Overdraft facility is only given against the collaterals or securities. Before disbursing the amount the lender analyzes the borrower’s credit history, relationship with the institution, business cash flow and the repayment history before approving a certain fixed overdraft limit.
Business Credit Card
Many times a business owner is in need of immediate funds or fast cash to make operations run smoothly in a business. Apart from a business credit card is also known for earning rewards on the repayment of the loan. Business credit card fulfils the needs of the user and provides them with the required support.
Loan Against Property for SME
The business cycle does not remain at a particular phase for a longer period. A business owner sometimes observes a boom or sometimes faces recession. And sometimes the situation gets worse and the owner has to take a loan to be back on the track. When the requirement is of more than 50 lakhs at that time the business owner has to mortgage his property to avail the loan. Such types of loans have lending tenure of 15 to 20 years.
Powercash is a stop solution for all your financial problems. We have exclusive rates at which we offer different kinds of loan to our customers. Our lowest interest rate and lenient policies will ease the process of loaning for you.