Mr. Shashank Kumar Sinha, a resident of Patna, was a successful engineer who had working expertise of more than 5 years. Of late, he has been wondering to kick-off his own engineering consulting firm, but for that, he wanted money.
He had an idea that he could avail a business loan from one of the leading and most reliable non-banking finance company (NBFC) like Bajaj Finserv. He was also not concerned about the loan approval as he has checked that he had a good credit score and a clean repayment history.
However, what concerned him was his inability to determine what kind of business loan would suit his needs! Yes, if you are a bit confused about selecting a business loan, you would be amazed to know that there are many types to cover many needs.
This post will give you a quick perspective on some of the major business loan types available in India.
A quick look at some major business loan types
- Working capital loans
If you have a working capital need and if you apply for a machinery loan with a lender, it won’t get the approval. Thus, before availing a loan for business, it becomes a must to distinguish your needs first, and then only apply for a quick business loan. You can apply for a working capital loan with a leading bank and non-banking finance company (NBFC), and get up to Rs.30 lakh. Business owners usually apply for a working capital loan to finance the short-term financial burden of their firms. Unless a business has a working capital, it won’t survive in the long run. A working capital loan is one of the most sought-after business loans in India.
- Machinery loan
How would your business flourish unless you don’t get the latest machinery in practice? Yes, technologies have evolved with state-of-the-art machines helping entrepreneurs to maximize their production and serving more orders and clients. That’s where lenders have categorized machinery loan in which you can avail a loan of up to Rs.30 lakh to fund the machinery buying regime efficiently.
- Term loan
A term loan is a standard or conventional loan type where you can borrow an amount as per norms of the lenders, but for a specific need and avail a lump sum figure. A term loan is lengthy and helps a borrower to repay it in smaller EMIs. As a result, a borrower is able to manage other aspects of his/her life and business. You can ask for a higher amount of loan, may or may not have collateral, and the rate of interest may be lower for a collateral based loan. Basically, term loans may have a tenor ranging between 5 and 20 years or even more as per the terms of the lenders. The rate of interest could either be fixed or variable. For availing such a loan, you will need to prove your eligibility which may depend on your credit score, past repayment record and more. Sometimes, a lender may also ask your financial projections including proving your repayment capacity.
- Equipment financing
If you have a business that deals in manufacturing, you can avail an equipment financing type of small business loan. Equipment could be costly and purchasing them with your savings or business’ profits could be bad, so availing a loan for it is a good move. You can grab an unsecured equipment financing loan from top lenders like Bajaj Finserv up to Rs.30 lakh.
The Bottom Line
You just went through some of the major and most sought-after quick business loan options in India. If you are mulling seeking a business loan from a lender, you should first assess the needs of a business and then only apply for a right loan.
Applying for a correct loan as per the needs of the business convinces a lender that you know your business’ needs inside out and could be trusted for timely repayment.