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Looking for a business loan? With so many types of loans now available, how will you pick the right loan for your business? The size of your business can help.All the different types of small business loans are ideal for business of various sizes. Understanding some of the popular options can make it easier for you to pick the best for your business.
1. Line of Credit (LOC)
A Line of Credit is very different from a standard business loan . With LOC, the lender will approve a credit limit for your business. You can then take a loan up to this maximum limit as per your requirements. While repaying the loan, you will only be required to repay the amount that you have actually used.LOC is beneficial for micro-businesses that have seasonal demands. With LOC, a small business can get a loan of up to Rs. 5 lakhs.
2. Unsecured Business Loan
An unsecured business loan does not require the applicant to pledge anything against the loan amount. As the lender is required to carry a higher level of risk with such loans, they are more expensive than secured loans.An unsecured business loan can be a great option for a small enterprise operating from a rented property. With an unsecured business loan, you can borrow up to Rs. 10 lakhs and even more.
3. Secured Business Loan
With a secured business loan, you can keep an asset like your commercial property as collateral against the loan amount. These are big-ticket loans that come with flexible loan tenure and repayment options.
Medium-sized businesses with an annual turnover of Rs. 1 crore to Rs. 10 crores can consider taking a secured business loan. With this type of small business lending , you can borrow up to Rs. 20 crores and more.
4. Working Capital Loan
These are generally short-term loans used for managing expenses of day-to-day business operations. From paying rent of your commercial property to purchasing monthly business supplies, a working capital loan can be used in different ways.As businesses of every size need a regular flow of money for their operations, every size of SME can consider this type of loan. Based on the lender you select; you can get up to Rs. 50 lakhs with this type of loan.
Selecting the Right Business Loan
To make a decision, you can always get in touch with a top business funding provider and discuss your requirements. Prefer a reputed lender that offers different types of business loans so that you can select one that perfectly matches your financial needs.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
