A TO Z OF BUSINESS LOAN
You generally see headlines like ‘A to Z of xyz’, don’t you? Then what does ‘A to S’ means? S, here stands for starting, because as they say, the journey of thousand miles starts with a single step.
Waiving off financial burden, relief in tax and tariffs and liquidity in cash are some of the benefits of this loan. As suggested by the name, the loan taken for business with intent to repay at a certain interest rate is known as business loan. CIBIL score, age of applicant, nationality and age of business qualify themselves as various parameters for eligibility. As far as CIBIL score is concerned, it acts as both, the cause and the consequence of it.
Duals of Business Loan
- It can be broadly divided into two categories: secured and unsecured. In the secured ones, there is a collateral involved while unsecured is the one without collateral.
- In accordance with borrowing structure, it can be done in two ways: equity finance and debt finance; involving money for the initial and shares for the latter.
- As far as lending organization is concerned, ventures can attain loan either from private banks or through government schemes like PMMY, NSIC, MSME loan in 59 minutes and CLCSS.
Nitty-gritty of the system
Fresh business ventures do not qualify for loan from private agencies, hence hectic document verification process from government institutions comes as the last resort for them. Ventures, older than 3 years can go for private organisations with business vintage proof, ITR, and record of average balance. The range of loan varies from 50,000 INR to 50,00,000 INR in majority of the cases. On the other hand, the maximum duration of time is of three years, again in majority of the cases.
Business loan is not corporate loan
Though in layman language, the terms are used interchangeably but the fact is, in technical world, the jargons need to be used appropriately. However, the difference is only in terms of the age of company and along with it, the amount of loan it can borrow.
The private players, in comparison to the public ones come up with additional benefits of quick approval, zero collateral, minimal documentation and long repayment time limit, just to name a few. Since nowadays, business wave is turning into huge tide, the term and its’ applications are getting their due recognition.