Top four different kinds of business loans in 2020
There are many financial theories to help your business grow and run smoothly. But capital investment and the different kind of financial loan investment is a crucial decision for every business. There are many options available in the market but the top 4 financial loan investment theories currently available to ensure a quick cash flow are as follows:-
1. Business term loan
This is a great option because the term of the loan can be as long as 3 to 4 years. Business term loans also have the lowest cost capital to give you the lowest monthly payment. A term loan is also a better option if you are doing capital improvements to your business and are planning an expansion that will not give you immediate returns. But if you need access to the on-going capital a long term loan might not make sense as the access to more capital loans will be difficult from the lender. For example – If you are in a business where you need the loan to buy and maintain inventory on a daily basis then business term loan is not the right option for you but if you are looking to open a different branch of your business which is a one-time investment but will give you returns in a long time then this is a great capital option.
2. The business line of credit / Working Capital Loan
The problem we discussed above the on-going need for capital can be solved by the business line of credit. If you are in a business that has to lay out money to do jobs and then get paid after the job is complete then the business line of credit is the right financial investment for you as it maintains a great cash flow in the business. This line of credit is super popular in the refurbished business where people buy and sell old things. A business line of credit can help them not lose a great opportunity in terms of immediate capital. People who are in a growing start-up and they don’t know how much capital they would require certain things. They should pick this option because the system with this credit is pay peruse. For example – if you need Rs. 10000 for something and you have been granted the credit capacity of Rs. 100000, you only have to pay back the amount of credit you have used and not the total credit capacity.
3. Pradhan Mantri Mudra Yojana
This scheme was started in 2015 by the Prime Minister of India to give a boost to start-up culture in India. The basic of this scheme is the government provides you with a loan up to 10 lakhs for a small or medium business. This loan is approved by your local authority. The interest rate is subsidized and the needful requirements are very simple:-
- You need a project report discussing where and how you will use the loan amount
- You need projections about how your business will grow and help others
- A bank approval
This loan is a power boost for people who aspire to become business tycoons.
4. Equipment Financing
It is what it sounds like. Equipment financing is getting a loan to purchase particular equipment. The good thing which I personally love about this loan is that the lender is willing to set the term as long as 5 years or more depending upon the equipment as the capital is safe with the equipment. So, if you are in a business that requires huge capital for equipment then you should utilize this option because it frees up your business from other sectors as all the financial loan is leaned upon that equipment. It can give you the opportunity to apply for more financial leverages like small business loans etc. to grow your business and ensure the smooth running of the capital flow.
Like every Child, every business also has different needs. So when you are applying for a financial loan you need to scout all your options and decide after securing the future of your business’s growth.