Business Loan: Types of Business Loans & How to Apply for Your Needs

1. Business Loan: Types of Business Loans & How to Apply for Your Needs Mynd Fintech

2. Businesses need funds to sustain themselves and grow. For MSMEs, a regular cash flow is required so that there are no disruptions in production and other business activities. Banks and NBFCs have traditionally been the main sources of finance for MSMEs. However, in recent times, there have been more sources which are gaining prominence. Supply chain financing is one such method that has grown in recognition among MSMEs in recent times.

3. WHAT IS A BUSINESS LOAN? A business loan helps to fill the gap between the required funds and the available amount of funds in the business. Business Loan is a financial assistance that is provided by banks and NBFCs to meet the funding requirements of a prospective business owner. Business loans are offered to aspiring entrepreneurs, owners of small or large businesses, MSMEs, professionals, etc. in order to establish or grow a new venture successfully. Depending upon the exact requirement of the Business, the loans are termed accordingly. For example, a loan extended to an MSME is called an MSME business loan. These business loans may be secured loans or unsecured loans.

4. TYPES OF BUSINESS LOANS: DOCUMENTS REQUIRED FOR BUSINESS LOAN APPLICATION Depending upon the requirement of Business, there are different types of business loans. These business loans may be classified as working capital loans, business line of credit (LOC), Invoice Discounting, and Equipment Financing, among others. 1. Loan application form, duly filled, along with passport-sized photographs of the applicant. 2. KYC Documents of the applicant – Identity proof like Aadhar card/PAN card/Passport/Driving License/Voter ID card and address proof like utility bills (Water or Electricity Bills). The bill must not be more than 3 months old from the date. 3. Bank statement of last 1 year. 4. Copy of Non-Collateral Overdraft, if any. 5. Copy of Business Incorporation 6. Any other document, if asked by the lender later.

5. BENEFITS OF BUSINESS LOANS: • Quick loan processing: Compared with other traditional methods of financing, business loans get supported quicker. A loan received in time can assist you with profiting from business open doors and develop your business and benefits. • Flexibility: Unlike other traditional finance choices, business loans are adaptable. They don't direct the way in which you ought to utilize the advance sum. They are simply worried about opportune repayments. • Reasonable interest rates: The interest rates on business loans are lower contrasted with other traditional advance choices. • No collateral required: Business loans are generally given without asking to any guarantee security, gave you satisfy their qualification rules. • Preserving your business ownership: Since the business loans are unstable, you don't gamble with important organization resources or stocks to get the loan. • Multiple loan options: Depending upon your careful prerequisite, different kinds of business loans suit your need impeccably.

6. CONCLUSION A business loan is an easy and effective way of meeting your short-term business needs. However, supply chain financing does it better than business loan. It lets you run your business without any major interruptions. You can opt for the facility when you need it and stop it as and when you want it. This makes this a highly flexible and reliable method of financing for businesses that require continued working capital. So, if you are getting stuck somewhere and need funds for a shorter time, then supply chain financing makes much financial sense than business loan.

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