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The basics of business loan

20 Apr, 2009 By:Unknown in Business Loan,

Business loans are provided by various banks to business people for their short or long term financial needs. A lot of times it is important for businessmen to acquire a certain amount of money for running their enterprise. It is well known that without the required capital no business can run. For any business whether in initial stage or in growth phase, capital is required to keep up the momentum.

Banks and other financial institutions offer business loans for expanding, modernizing or improving small, medium or large scale businesses. Banks often offer loans that are either secured loans and unsecured loans. A secured business loan means that the businessman keeps something as collateral against the loan amount taken. Collateral can vary depending on various factors. It can be anything from raw material to finished products, land or even the building of the business. In secured business loans the interest rates are comparatively low and they have much more flexible repayment options.

Secured loans are long-term loans that can be given to business owners that are well established and wish to increase their fixed assets or expand their business. Long-term loans can also be provided to start-up businesses, usually for purchases of land or buildings, construction efforts, and long-term working capital. These loans have terms that run 3-5 years.

On the other hand, unsecured business loans do not require a collateral. It is often at a higher rate of interest and are taken for a comparatively smaller tenure. These short-term loans are usually used for short-term working capital for a business temporarily in need of cash. It is needed mostly due to seasonal fluctuations, and other short-term problems that a business may encounter. Before going for a business loan properly evaluate the situation. See how badly your need the money and when. You should evaluate how much loan you should take that you can easily repay later.

 

Comment:(35)
on 27 Oct, 2016

Very true! Makes a change to see sooemne spell it out like that. :)

on 19 Feb, 2016

Hello.With all due respect to poiuervs answers, they are virtually all wrong. The worst thing you can do is borrow even more money and get into even more debt to pay off your creditors especially when there are other solutions.I assume you are in the UK? If you are, please make an appointment with your local Citizens Advice Bureau as a matter of extreme urgency. The idea is to REDUCE the amount of money you owe and not INCREASE it as others here think you should. If you owe over a specific amount say a315000 then it is possible to get a legal solution to REDUCE what you owe and write off that which you cannot afford to repay.This is the much harder option to go down, and it may take a while for such legal aspects of debt repayment to be concluded. The real benefit to you is that any existing debts could be repaid within 5 years and at an amount YOU can afford. Please do not go down the route of creating more and more debt when there are real viable alternative solutions available.Trust me this really IS the best way forward.Big L 266

on 18 Dec, 2015

it would be best to talk to an attorney that slieiapczes in bankruptcy. consultations are usually free and they will be able to tell you if it is possible. also ask them if you decide to ever go back for advanced degrees or other programs of studies (which many people do I'm sure hard for you to imagine now) how that default of the student loan would impact you then in the future. Good Luck in making a hard decision.

on 31 Aug, 2015

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on 09 Aug, 2015

I want to start business which is manufacturing unit on my own for which I need start up loan. I heard there is special loan for women entrepreneur

on 09 Aug, 2015

I want to start business which is manufacturing unit on my own for which I need start up loan. I heard there is special loan for women entrepreneur

on 09 Aug, 2015

For women entrepreneur into manufacturing unit business is there any special loan for starting up the business
I need start up loan
Thanks

on 09 Aug, 2015

I want to start business which is manufacturing unit on my own for which I need start up loan. I heard there is special loan for women entrepreneur

on 04 Jul, 2015

I am Joseph, I started my business in the month of Oct 2014 (6 months back), we provide insurance & claims services to motor & auto construction equipments, we also sells automobile gadget as a cross sell product. The Initial investment was 7 lak, i was trying to arrange a business loan, but most of the banks required 2 years old business. Finally I started with support of friends. Now I wanted to return the amount, it will be great support if anybody can help me to avail a loan of loan of Rs.6 lak.

on 18 Jun, 2015

sir I want to start business
but I haven't many because I need many 3 lack I have certificate 12 passed first division 64 • /•

on 28 May, 2015

I need a loan for starting business.But I have nothing to show as collateral to bank except my qualification.

on 06 Apr, 2015

sir iam starting business in aluminium anodizing in banglore peenya pls in, starting in 3laks amount

on 18 Jan, 2014

Respected all,

please advice me how can i get loan for starting my business through my graduation(commerce stream) degree.

on 11 Jan, 2014

Dear/Madam, My self Rehman I want to start a wholesale business products of TEA Paudar at Bangalore of my self finance. After start the business how many month later I will be eligible for applying for business loan. I have needful for a loan why not I am a not reach man but I want start a good business for my & family feature . Now what I do? Give me the solutions. Thank & regards with REHMAN.

on 27 Oct, 2013

hi iam planning to start consultancy business in chennai.i dont have any collatral.i need small loan minimum 1lakh.can any one suggest.

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on 28 Oct, 2011

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