It is important for a small business owner to know about the types of business loans available to start a business based on the requirements.
Types Of Loans To Start A Business
Here are a few types of loans you can apply for to start a business…
1. Unsecured Loans:
Unsecured loans are mostly provided by NBFCs. Unsecured loans require no security.
A secured loan requires some kind of thing / asset to be given as security and generally has a lower interest rate than an unsecured loan. You just have to apply online and uploading the required documents online. The loan amount will get disbursed as soon as it is approved. A new business is less likely to qualify for unsecured loans as a lender requires information like the profitability of your business.
2. Loan Against Securities:
If you have invested in mutual funds, demat shares, insurance policies etc., you can avail loan against these to meet the financial needs of your business. You can use the funds raised by pledging financial securities for business purposes. However, these can only be pledged to raise funds if approved by the bank.
3. Term Loans:
This is a type of business loan which is provided for the purchase of fixed assets like machinery. Term loans have a fixed repayment schedule which may be due monthly or quarterly and a fixed or floating interest rate. The normal amount of time for repayment for a term loan is between 2-10 years.
4. Loan Against Property:
This loan is taken by giving property (commercial, residential, or land) as collateral to the bank. The funds raised through this method can be used for business purposes like advertising, business expansion, starting a new business, etc.
5. Gold Loans/Loans Against Gold:
This loan is taken against gold jewelry or gold coin and can be raised easily. But most of the banks do not lend money more than 20 lakhs, in a gold loan.
If you are looking for unsecured business loans to grow your business, get in touch with Gromor! We offer loans up to Rs. 10 Lakhs to businesses which are more than a year old, through a simple online application process!