Business Loan

Every business needs fund to get established and run.

Typically business loans are of two types.- Unsecured and secured. 

As the name suggests, unsecured business loans are not backed by any collateral. Banks apprise business models, past financial performance and repayment habit finalise a loan amount. PSU banks offer the loan upto 7 years tenor but they ask for a detailed report of business plan and growth. Whereas private banks and NBFCs approve the loan based on past financials mainly with a maximum tenor of 36 months. 

Secured loans are loans that are backed by a collateral often by a mortgage or FD. Banks, analyse the financials and find out working capital requirement of the business and offer a limit (cash credit limit) upto 70-75% of working capital requirement. 

Banks also offer term loan and bank guarantee as per requirement.

Banks also offer loans to green field projects based on credentials of promoters, viability of projects.

Needless to say, interest for secured loans is attractive than that of unsecured loans.