Whenever there is a business, there is an idea behind it. But many marvellous ideas never make it to the reality, because of the cash problems related with the amount of money required to get the idea on the floor. This was a scenario of older and simpler times when the only easy loan you can get was from loan sharks. With the advancement of modern technologies, it became easier for borrowers to borrow loans and, for banks it became easier to provide loans as the history and credit check became easier and more reliable because of emerging of IT technologies.
Business loans available in India are the loans provided to you in lieu of your business idea. Wherever there is a great business idea and cash-crunch is a problem, help comes to the rescue in form of business loans through banks. Business loan can be available for not only new ideas but also to expand your existing business or to modernize it or to grow your business to a whole new level. Business loans can also be taken to pay your credit to your suppliers if that is harming your business.
Business loans are generally of two types: –
Secured business loans – are the business loans which are provided to you by bank or entrepreneur against a security or collateral. It can be your property, raw material, finished product or any other asset which fits to them as an appropriate security or collateral against the business loan. Interest rate in this type of business loan is comparatively low and the time provided for repayment of the loan is also more.
Unsecured business loans – are the business loans which are provided to you by bank or entrepreneur without any security or collateral. This type of business loan comes with a higher interest rate and shorter time period. This type of business loan is provided to the established business institutions which are in a temporary need of cash to boost their business and need not prove their business status in market and their goodwill in market.
The interest rates on the business loan are comparatively lower than other expensive unsecured loan. Loan amount on business loan can be from Rs 10 lakhs to Rs 5 crores for small businesses. You can also choose between the options of EMIs based loan or an overdraft. The tenure for repayment of the loan is between 3years to 10 years.
The loan amount will be up to the 70% of the amount you need for the business purpose.
Whenever you opt for a business loan, please keep in mind to compare the exact EMIs or amortization for the business loan, tenure of the business loan and documents required for business loan by the banks to choose from which bank you want to take the loan. If a person asks for fees to get your loan sanctioned, never listen to that man. Always provide document to one bank only and to an authorized vendor and authorized bank employee. Under any circumstances you should never provide banks with false documents or false information as this may lead to you being declared a fraud or even blacklisting you for any future loan approval. Never sign a blank document regarding your loan. There are many frauds looming in the market that can con you of your money, so be careful when you apply for loan and do so with authorized vendors and bank employees.