- Planning to establish a new business
- Planning a rapid business expansion
- Need new equipment and machinery for your business
- Require additional working capital for your business
- Need capital infusion in the business to turn it profitable
- Need capital to replay previous loans
What are Types of Business Loans?
Based on its nature, the business loans are categorised into eight types.
A demand loan needs to be repaid based on the demand schedule of your lender. Banks and the financial institutions offer both secured and unsecured demand loans. The repayment tenure of demand loans extends up to maximum 12 months
Loan against securities
Such loans are offered based on bank approved financial securities such as insurance policies, mutual funds, demat shares, saving bonds, fixed maturity plans etc. Such loans can be secured to mitigate an immediate financial crisis
During a financial crisis, the business can secure instant cash from the lender by submitting invoices of credit sale as security
Letter of credit facility
This type of business loan typically used in international transactions. This type of loan can be availed based on the creditworthiness of buyer’s bank when the seller and the buyer do not know each other. This ensures on-time payments to the seller based on the letter of credit offered by the bank
Cash credit facility
It is similar to the overdraft facility. In this facility, the maximum withdrawn limit is set by the lending bank. The repayment tenure can be renewed for such loans in each 12. For working capital management this loan can be used .
It is a type of secured loan and can be availed with a mortgage or bank guarantees such as property as collateral.