Business Loan
During the global credit crunch, it has become harder for small businesses to obtain loans from banks. Those that do receive loans typically have built up a solid track record in business and can show a banker a well-developed business plan.
There are generally two types of loans offered to small businesses: secured and unsecured. One of the most common, a secured line of credit, allows you quick access to money you may need to keep business flowing, whether you need to buy equipment or pay an unexpected bill. To get this type of credit, you'll need to use the assets of your business, such as your accounts receivable or inventory, as collateral. Because you have reduced the lender's risk by putting up collateral, the interest rates for this type of credit tend to be lower than for unsecured credit. Unsecured loans are harder to get, because you don't put up collateral. They carry higher interest rates to reflect the risk the lender is taking.
Other loan types may include so-called "term loans" for small businesses, which can vary in maturity dates but typically are not longer than 10 years; or longer-term debt for factory, plant and equipment, which is feasible for larger businesses.
Loans are a salient feature of setting up a business the world over. Most banks in India, in both the public and private sectors, offer business loans ranging from small, unsecured loans to large corporate loans. A loan broker is sometimes used to facilitate the transaction.
