Corporate loans, also popularly termed as business loans, is an excellent solution to acquire additional funding for an operating business. Any existing business that needs to generate working capital or need funds for other business purposes, can apply for such loans. Generally, corporate or business loans can be used to take care of both long term expenses as well as short term expenses of a business, regardless of its size or type or its industry of operation.
Corporate financing can be categorised into two categories based on the necessity of collateral for the loan.
- Secured business loans: These are the kind of business loans that require a collateral or security as mortgage for the loan, and you can generally get benefits like lower rate of interest, higher borrowing limits and longer repayment tenures for secured business loans
- Unsecured business loans: These loans do not require any collateral and are generally offered by lenders to businesses for their immediate fund requirements. Generally, a business needs to have a good income and high credit ratings to avail unsecured business loans.
Types of Corporate Loan
There are numerous lenders offering corporate loan all across India. Businesses of all sizes and kinds, including SMEs and startups can avail such loans along with major firms and established businesses. Every business owner must be well-informed about the essential details of these loans, before they know the answer to the question:
“How To Apply For A Corporate Or Business Loan?”
First, let us take a look at the various and most common types of business loans available in the market.
Term loans: Offered by lenders for a fixed term, these loans may have fixed or floating interest rates and can be used for a variety of purposes including capital infusion, purchasing business property, purchase of new machinery, etc.
Loan Against Securities: A business gets a loan by pledging securities. This may include financial securities like mutual funds, bonds, fixed maturity plans, insurance policies, demat shares, exchange-traded funds, etc.
Letter of Credit: The lender provides a letter to the seller guaranteeing that the business will make payment on time for the expected amount.
Cash Credit: A business can pledge its assets like receivables or inventory for this type of financing. The cash credit withdrawal is limited up to 70% to 80% of the value of pledged assets, with an annually renewable tenure.
Bank Overdraft: The bank allows the business to debit its current account below zero, up to a specified limit.
How To Apply For A Business Loan?
Applying for a business loan in today’s time is really simple and straightforward. You have numerous options as far as loans and lenders are concerned. All across India, banks as well as finance companies are offering these loans to businesses of all kinds and sizes.
You have the option of applying for such loans both online as well as offline. If you want to apply for such loans online, choose your preferred lender and then head to their website or mobile app and search for “business loans.” Check out the details, terms and conditions, eligibility, documents required and all other information available before you apply for the loan. The representatives of the lender will get in touch with you if you place an enquiry.
If you are doing it offline, then you will have to contact the representatives or loan consultants of your preferred lender via mail or telephone. They will provide you with all the details and information you need. You can also visit the office of the lender ( or the branch, if it’s a bank) and directly speak with the concerned personnel about business loans.
Things To Remember
- Always check your eligibility before you apply for a loan.
- Make sure you have an idea about your repayment capabilities.
- Read and be informed about the loan terms and conditions.
- Choose a lender that can provide the most sustainable loan with low interest charges and funding that suits your needs. The repayment tenure must also be suitable and flexible if you need it to be.
- Research and compare the offers from different lenders.
- Get all the documents ready and make sure all the information and documents you provide during the application are accurate and error-free.
With those things in mind, you can easily avail a corporate loan. Getting such loans in today’s time is pretty seamless and hassle-free and with the right lender, you can get the funding quickly and easily!