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Apply small business loan

The most important part of starting a new business is finding funding. It has been estimated that more new businesses fail through lack of adequate initial funding than any other single cause. One of the most common ways to fund a new business is through business loans. A business loan is money lent for a specified amount of time at a set interest rate for the purpose of starting, expanding, or otherwise financing a business. There are a number of different types of business loans, depending on your needs and those of your business.

Type of Loans:-

Loans can be 1.Long Term Loans 2. Special purpose Loans 3. Short term Loans 4. Cash-Credit 5. Equipment Financing Loans 6. Credit Card Loans

Long Term Loans

These are most common type of loans wherein a specific amount which is usually very high is taken for a period of seven years or more and used for larger amount of money. Repayment of this kind of loan is done either monthly or on quarterly basis. These type of loans are ideal for large sum of money that can either be invested in stocks or trade.

Special Purpose Loans

These type of loans are taken when a company requires money for special purposes like for example Renovations and furniture works

Short term loans

Short-term loans typically mature within one year and are often paid in a lump sum at the end of the term, rather than in monthly payments like most longer-term loans. Short-term loans are most useful for smaller amounts and uses such as seasonal inventory buildup or other small investments that offer quick returns.

Cash Credit

It is a facility given to current account of the buisness wherein the bank funds additional amount to the buisness in hypothecation of its stocks or inventory. This facility is used most commonly by the buisnesses.

Equipment Financing Loans.

This is least risky loan wherein a bank facilitates the funding of perticular equipment which remains in hypothecation of the bank. There is no lein against entire buisness, or property or savings.

Credit Cards

Credit card loans are loans taken out against your past credit record and expected future business, rather than loans taken out using your credit cards. If buisness has three years of good credit history the rates of interest are very good.

Rate of Interest

Rate of interest varies from 10% to 24% depending on wether it is a secured loan(loan against a security) or unsecured loan(loans without security or morgaged property). Unsecured loans are usually in form of cash loans which are taken from moneylenders and the rate of interest is exceedingly high.

Sources of loan

1. Banks 2. Commercial organisations 3. Private Moneylenders 4. Friends 5. Community Banks 6. Government organisations.

How to apply for business loan

Usually banks ask for security in terms of fixed deposits, fixed assets ,morgage the stocks or hypothecate the instruments. Money lenders give money on basis of either fixed assets or gold. Banks can even sponsor a project if projected in a right manner and in right sense. Government grants can also be asked for the educated unemployed.