A personal loan is a type of unsecured loan and helps you to meet your current financial needs. You generally do not need to pledge any security or collateral while availing a personal loan and your lender provides you with the facility to use the funds as required. It can serve as your solution for managing your travel costs and wedding expenses, as well as the expenses of a medical emergency, home renovation, debt consolidation, and more. Bajaj Finserv offers India’s fastest personal loan with instant approval and disbursement within just 24 hours. Know your personal loan eligibility, use a personal loan EMI calculator, and apply for a personal loan in just four easy steps! Think about it. Done with Bajaj Finserv.
WHAT IS A BUSINESS LOAN A business loan is a loan given exclusively for business purposes. [1] As with all loans, this includes the creation of a loan, which will be repaid with additional interest. There are a variety of business loans including bank loans, mezzanine financing, asset-based financing, invoice financing, microloans, business cash advances, and cash flow loans. [2] Content 1 type 1.1 Bank loan 1.2 SBA Loans 1.3 Mezzanine Finance 1.4 Asset Based Finance 1.5 Invoice Finance 1.6 Microloans 1.7 Online Lender 2 secured and unsecured business loans 2.1 Personal Guarantee 3 references type Bank loan See also: Loans A bank loan can be obtained from a bank and can be either secured or unsecured. For secured loans, banks will require collateral, which can be lost if repayment is not made. Banks likely want to look at business accounts, balance sheets, and business plans, as well as study the principal’s credit history. Many small businesses are now turning to alternative finance providers, especially in the case of small companies. [3] Loans from credit unions can also be referred to as bank loans. Business loans from credit unions received the second-highest level of satisfaction from borrowers after loans from small banks. [4]
SBA LOANS The US Small Business Administration (SBA) does not offer loans; Instead, it guarantees loans made by individual lenders. The main SBA loan programs are SBA 7 (A) which includes both Standard and Express options; Microlone (up to $ 50,000); 504 loans that provide financing for real estate such as real estate or equipment; And disaster loans. In FY 2016, a total of 7 (a) amounts to $ 11,967,861,900 and a total of 504 debt amounts to $ 2,517,433,000. [5]
MEZZANINE FINANCE Main article: Mezzanine Capital Mezzanine finance effectively secures a company’s debt on its equity, allowing the lender to claim part-ownership of the business if the loan is not repaid on time and in full. [4] This allows the business to borrow without other collateral, but risks reducing the principal’s equity stake in case of default.
ASSET-BASED FINANCE Main article: Asset-based lending Once a finance option is considered as a last resort, asset-based lending has become a popular option for small businesses that lack a credit rating or track record to qualify for other forms of finance. [of] In simple terms, this involves borrowing against one of the company’s assets, with the lender focusing on the company’s credit rating and the quality of the collateral rather than the prospects. A business can borrow against many different types of assets, including premises, plants, stocks or receivables.
INVOICE FINANCE Main article: Invoice Waiver and Factoring (Finance) In recent years, it has become increasingly difficult for SMEs to obtain traditional finance from banks. Alternative options are invoice discounting or factoring, whereby the company borrows against its outstanding invoices, with the ability to receive funds as soon as new invoices are created. It is often asked which option is best for your business – factoring or discounting – and the answer depends on how the business wants to be perceived by customers. [citation needed] With factoring, the finance company charges interest on the loan until invoiced. Payments, as well as fees, and the finance company take ownership of the debtor ledger and use their credit control team to secure the payment. With an invoice waiver, the business controls its own ledger and chases loans. MICROCREDIT Small loans, usually for loan amounts of $ 100,000 USD or less, are called “microloans”. Banks are less likely to reduce these loans than alternative lenders. When they do, the decision is usually based on the business’s personal credit score and/or business credit score. [decision]
ONLINE LENDER The number of online lenders offering small business lending has increased. Online alternative lenders generated an estimated $ 12 billion in small business loans in 2014, with unsecured consumer loans accounting for $ 7 billion and small business loans of about $ 5 billion. [8] Nonbank lenders who make small business loans have doubled their outstanding portfolio balance every year since 2000. [9] Some originate loans online from their own capital. Others may use the “marketplace” model, in which they match lenders’ loans to products from different types of lenders. Popular business lending products lending online include term loans, lines of credit, and merchant cash advances. Others use crowdfunding platforms that allow businesses to raise capital from a wide variety of sources.
