Introduction
Kfis provides business loans for all businesses that want to invest in their operations and expansion. A business loan allows borrowers to obtain the funds or line of credit to satisfy the company’s requirements. The loans are provided to customers with the understanding that the borrowers will repay the loan with interest.
This capital is essential for all businesses, which can use it to purchase equipment and supplies. Business owners can also use it for investment, managing business functions, and paying their employees. Let’s see the different types of business loans that are available.
Types of business loan in India
Familiar business loans are obtainable for customers. The following business loans are:
Term loan
Kfis offers term loans for businesses. These loans define the loan amount paid at particular intervals over the scheduled period, along with interest. You can access the business loan as a secured or unsecured loan. There are two kinds of term loans: unsecured loans and secured loans. Your business loan capital limit is decided based on your business credit history.Â
The repayment tenure of business loans varies depending on whether short-term or long-term. The repayment duration of short term loans is up to 24 months. On the other hand, the long-term repayment period lasts up to 48 months.
Usually, the business loan amount gradually increases to purchase equipment, fixed assets, and building investments. After you get approval for the term loan, lenders offer the loan amount as the business’s capital.
Unsecured Business Loans
An unsecured business loan provides funds that you can borrow from lenders without pledging any property. You can obtain financing through unsecured business loans for various purposes. Further, you can pay back the loan amount and interest through EMI (Equated Monthly Installment).Â
Lenders evaluate repayment capacity, business profile creditworthiness, and revenue statements. Eligible business owners can acquire loans to renovate business infrastructure, upgrade machinery and equipment, and develop their businesses.Â
MSMEs can also benefit from this unsecured business loan in chennai. MSME enterprises can apply even when they have limited pledging properties.
Secured Business Loans
Secured business loans provide a customized financial solution for business owners looking to expand their business. Whether investing in equipment or company assets or providing finance for MSMEs, you can get a higher loan amount than an unsecured business loan.Â
Moreover, secured business loans have longer repayment tenures than unsecured business loans. You can access secured business loans with collateral such as company assets or residential property. Your business can achieve significant development and stability through this structured financing format.
MSME Business Loans
MSME business loans specifically focus on satisfying the finance requirements of businesses in the MSME enterprises. There are several financial sources that provide MSME business loans, including government scheme agencies and Non-banking financial companies (NBFC).
MSME refers to micro, small, and medium enterprises. MSME loans are given to small businesses, newly established businesses, and businesses expanding their operations.
In India, overall business growth depends on a large number of micro, small, and medium enterprises eagerly trying to succeed in the competitive business field.Â
Overdraft Business Loans
It can provide business safety and allow you to acquire beyond the account balance up to the pre-approved limit. This overdraft business loan helps to manage the financial gaps of business transactions.Â
Additionally, it helps to cover unexpected costs and delayed payment of receivables. Also, it is valuable for medium to well-established businesses. If you face cash flow fluctuations in your business, this type of overdraft business loan helps you overcome the complexities of financial management.
When you have a business or current account, overdraft helps you access the loan amount from lenders. You can repay the loan and interest based on the line of credit.
Project Finance
Project finance offers finance for long-term business and industrial sector projects, including services, manufacturing, and industry. Specific project finance models fund the initial projects. These finance models include build, operating, and transferring.
The cash flow of projects allows for debt servicing and repayment. Financial companies depend on projects’ future cash flow management rather than the borrower’s balance sheet.
Projects have specific assets under control and act as collateral for project finance. Indian government companies and other businesses may need a project loan for combined ventures.
This project finance takes care of the financing requirements to initiate new projects. Industry corporations can also obtain this private finance to begin additional production facilities. Otherwise, you can access refinancing with existing loan debt.
Working Capital Business Loans
You can obtain a working capital business loan for your daily business operations, which includes day-to-day business operational expenses, invoice payments, employee payments and accounts payable. Sometimes, a business cannot get regular sales and profits in a particular year. In such cases, this working capital loan can be beneficial for them.Â
Occasionally, businesses may have cyclical sales, which means seasonal sales. During the festival seasons, business owners can require a working capital loan because their business may need more sales returns.
The finance company offers working capital based on the loan amount requirement and the business’s financial health.Â
Business Loan Against Property (LAP)
To operate a successful business, you need good marketing and finance. This business loan against property provides funds to expand your business to new markets.
You can acquire a loan against residential, commercial, industrial, or land and buildings. Obtaining a business loan against property (LAP) can save you more interest percentage.
 Further, you can access the maximum loan amount from the asset value. And its flexible repayment tenure is up to 12 years.
Letter of Credit
It mainly focuses on international transactions. Letters of credit are used by businesses that mostly deal with overseas customers. They can serve as funding guarantees offered by financial companies on behalf of their borrowers, which could be suitable for foreign companies.
In global business transactions, this financial solution is essential for finance companies to offer a bank guarantee that will be the customer’s payment to a seller. Further, it will reduce the risk associated with global transactions. Here, reliability and trust are essential for easy trade.Â
It will encourage cross-border business, which can deal with all terms and conditions that align with customer requirements.Â
Also Read : How To Obtain a Quick Business Loan Today
Conclusion
In this blog, we discuss the various types of business loans and highlight the importance of understanding the several types of business financing. As business owners, you can choose the most suitable type of business loan depending on your specific requirements and business events.
In Tamil Nadu, Chennai, Our Kfis company provides Term loans, secured loans, unsecured business loan in chennai, MSME business loans, overdraft business loans, project finance, working capital, Business loans against property (LAP), and letters of credit.