Different Types of Loans Available in the Market – The loan is probably the most important financial tool you have as a business owner. You need to get the money you need to expand your company or buy a new product or service to help it grow. The loan type you choose will depend on how much money you want to borrow, how long you plan to keep the loan and what your business needs are. There are several different types of loans available in the market today. These loans come in different denominations and durations so that borrowers get what they need according to their needs. Some loans are for small businesses only while others can be used by non-financial companies as well. Read on to know more about these different loan types so that you can find the right one for your business:
What is a Personal Loan?
Personal loans are meant for individuals who need the money quickly. Borrowers who require short-term cash should consider a personal loan. The interest rate on these loans is often lower than the rate at which commercial loans are issued. What you have to remember is that when you take out a personal loan, you are not taking out a business loan. There are some cases when you can consider a business personal loan but that is a different topic all together. If you need a personal loan, you can go to a bank or a credit union and get a loan approval done over the phone. You can also visit websites like easyLending.com to find a lender near you.
What is an Business Loan?
Business loans are usually non-interest bearing and have terms and conditions that are favorable to the lender. Lenders usually offer these loans to businesses that are in need of short-term funds. These types of loans are also sometimes referred to as cash advance or quick-cash loan. The business may repay the loan with interest.
What is an Equity Loan?
Equity loans are loans where you get some of the profit from the assets that you own. The idea is for the lender to benefit from your hard work and investment in the business. If someone wants to raise money for their business, they can usually take out a loan in exchange for equity. In some cases, you can even take out a loan and then buy back your equity after a set period of time. This loan can then be used as a regular business loan or you can use it to fund your initial investment in the business. Equity loans are usually easier to get than business loans but they come with higher interest rates.
What is a Taxation and Financial Inclusion Loan?
Sometimes called a leveraged loan, taxation and financial inclusion loan is exactly what it sounds like. The lender gets you, the borrower, and additional funds that can be used for tax payments, business expenses or other eligible expenses. This loan type is meant for small businesses with a turnover less than $1 million. Lastly, there is the food and clothing loan. This is sometimes referred to as a cash-out loan and is meant to get the money needed to buy supplies or make payroll. This loan is often very short-term and can be used to cover immediate needs such as inventory, repairs or seeds for a new business venture.
What is a Food and Clothing Loan?
A food and clothing loan is a bad loan. It is meant to get the money quickly to cover unexpected expenses like bills or a car repair. Borrowers on these types of loans usually have a history of bad financial management. The lender gets your money, and you get what you need to repay them quickly. The loan is often secured so that the lender gets the first claim against the assets if the borrower defaults on the loan.
A loan is just a promise to repay money. You get the loan money, and you have to repay it. This is what is known as the repayment schedule. Some loans require collateral to secure the loan against the borrower’s assets. Others require you to pay interest. Some loans even require you to pay a fee if you breach the agreement. Others may come with strict guidelines on how you can use the funds. When you get a loan, you have to get to know the loan type and borrower well enough to secure a loan with appropriate documentation. You should always review the different loan types to decide which one is right for your business. These loans can help you expand your company or buy a new product or service to help it grow.