Whether you’re an up-and-coming business trying to grow revenue or an established company looking to launch a new store, procuring the required funds can feel like a challenging endeavour. The easy availability of business loans, however, can help you realize your vision for your business.
When taking a loan for business, financial institutions help you decide which loan is best suited for your financing needs. However, it pays to do your due diligence. Although you can take your time to decide the specific loan you need, having a general idea about business loan agreements is important to getting a good deal.
Let’s take a look at different types of business loans and figure out the best one for your needs.
Working Capital Loan
To run daily operations in a smooth manner, you need a steady stream of cash flow. Even when business is booming, a lack of stable cash flow can halt growth and expansion, putting a damper on sales. Working capital loans help finance your company’s daily operations. They’re not meant for buying heavy assets or for making long-term investments; they offer the working capital you need to cover your short-term needs.
As the name suggests, term loans depend on the number of years (term) you require to repay. Short-term, long-term and intermediate-term loans are available based on your business’s credit score. The business loan eligibility for term loans varies across lenders. Tata Capital requires minimal documentation for term loans. All you need is your ID, bank statements and a business proof that shows the existence of your company and its profits in the last two financial years.
These loans are temporary and easily accessible. When in need of quick money, take advantage of overdraft facility to withdraw additional funds from your current account. You can withdraw money up to an agreed limit and interest is charged only on the amount you draw. This is the perfect business loan for women and MSME business owners looking to finance their home-grown label or set up their own business and give their enterprise the much-needed boost.
Most loans are secured, wherein the lender requires you to put down some collateral in exchange for the loan. Unsecured loans, on the other hand, offer money without any collateral. Established firms have a higher chance of lenders willing to write a loan as opposed to new businesses since they pose a higher risk. These loans can be useful for business powers who have large orders coming up and need money urgently without the long-drawn-out process of filling lengthy application forms.
If your business requires heavy equipment, it is important to invest in their repair and maintenance. You also require new machinery from time to time, which can potentially destabilize cash flow. Taking a machinery loan can help you buy or lease the required equipment to keep your business going.
Tata Capital makes running a business stress-free with tailor-made, unsecured loans that come with flexible EMI options. With loans for business, you can build the company of your dreams.