Starting your own start-up venture rates amongst one of the best feelings in the world. After all, you are your own boss and need not take orders from anyone. You are free to do things your way, as you like them and when you like them. But it also means that you have to shoulder most of the responsibilityand it includes travelling far and wide, working for odd hours, and arranging for finance as and when required. Initially, you need to put in your own funds to get the venture going.
After a certain period of time, you will require funds from an external source due to various reasons, such as delayed payments, purchase of new asset, or acquiring materials in bulk. Whatever be the reason, the matter of the fact is that you need money and you need it as soon as possible. There are some options for raising funds from venture capitalists but that would mean giving up a portion of your ownership in the venture. Well, there is no need to resort to such options as you can go for a business loan for your funding requirements. There are various financial institutions operating in the field of business finance that offer different types of SME loans to help business owners meet their liabilities in a timely manner.
What are Business Loans and how to apply for them?
Business Loans is a financial product which is offered by most lenders in India. As the name suggests, business loans are meant to be used for business requirements only. Business Loans can be used for any business-related expenditure, such as the purchase of machinery, upgradation of infrastructure, payment of expenses, or any other business-related expense.
With the rapid influx of technology in the financing sector, it has become really convenient for business owners to apply for a business loan online. You can visit the site of a particular online lending company you prefer and apply for the same. Business finance options from online lending companies usually come with a repayment tenor of up to 24 monthsand the rate of interest varies between 23 % and 28 % on the reducing amount, depending on the lender. In order to be eligible for an unsecured business loan of up to Rs. 5 Lakhs, your annual turnover in the previous year must have been more than Rs. 10 lakhs. Online lending companies offer you the opportunity to foreclose your business loan account without incurring any additional charges after the payment of a few EMIs.
Online lending companies conduct their operations through their website or mobile App only, thereby eliminating the need to take print-outs of large number of documents. You just need to upload the PDFs of the required documents to avail a business loan. If your profile meets the requirements of the online lending company, your application for business financewill be approved within a few working days itself. As these companies follow a comprehensive credit analysis using an independent credit evaluation process, your eligibility for a business loan is also enhanced.
Different types of SME Loans
Online lending companies offer a wide range of loans to help small business owners take care of their business-related expenses. Here are five of the most popular types of SME Loans in India:
- Machinery Loan:Machinery loans are offered to help small business owners purchase or upgrade their machinery resources that will help boost their production levels, bring down the production costs, and enhance the profit margins. A machinery loan offers an excellent way to upgrade the resources without taking out a huge chunk of cash from the reserves.
- Working Capital Loan: Working capital loans are offered to small business owners to help take care of day to day expenses. As many times, the goods and services are to be offered on credit basis, there is a gap between the time when money is required and when payment is due from customers.
- Unsecured Business Loan: General purpose unsecured business loans can be used by business owners for any business-related requirement and can use them as per their discretion without any need for prior consent from the lender.
- Business Capital Loan:Business capital loans are offered to help business owners take care of their capital requirements in business when they have run out of personal savings to invest in the business. This money is ideally used for creation of new assets.
- Business Loan for Women:To encourage female entrepreneurship unsecured business loans are offered to help female business owners establish new ventures or expand their existing venture. It usually carries a lower interest rate as compared to normal business loans.
Whatever type of business loan you choose to apply, you need to make sure that you have conducted thorough research, have compared different offers, and are fully satisfied with your decision.