Loans for Business

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

Loans for business refer to the loans available to the business owners of all sizes who need financial assistance to expand their business. Business loans are generally used for business start up, business growth or business enhancement. Business loans can also be used for further capital investment in business and for refinancing business debt. Almost every businessman takes loans for business at some point of time, because it is very obvious to need additional financial resources at various stages of business development.

There are various kinds of loans available to the business owners. They have to just pick the right one keeping in mind their own requirements, specific needs and personal capabilities of repaying the loan. Whatever be the size of the business, the lenders always verify the actual purpose of the loan and the viability or profitability of the business, before giving any loan. So, every loan request from the business enterprises should bear proper documentation showing the growth prospect and the estimated profits of the business clearly. Required documentation of loan varies from lender to lender. But the documentation of a business loan generally requires:

  • A strong Business Plan including an outline of target market of the business and the growth prospect of the business.
  • Proof of ownership of the business
  • Collateral to secure the loan
  • Personal financial statements
  • Tax returns
  • Past credit record

    Business loans can be availed from various resources. Among them Bank loans are very frequently taken by business owners. But it is very difficult to impress banks and it needs extensive documentation of business growth plan. For this reason maximum amount of loans granted by the bank goes to the large and established business houses. It is somewhat difficult for the small businesses or the start up businesses to acquire business loans from banks. The type of loan which is best suited for small businesses are Govt. loans. As these loans come with no limit on the loan amount and can be availed at easy terms and conditions, these are ideal business loan for a small business or for a business yet to be started. If a business owner succeeds to assure the govt. about the authenticity and profitability of the business using a well designed business plan and if the business owner has no criminal record, then it is not a difficult task to avail a govt. loan. Govt. also provides some special loans to the elderly people who want to start a business and also to the minority people for a new business set up. Loans for business can also be taken from other large business houses at the cost of indulging in a partnership with them.

    These loans from business organizations are generally granted after considering the target market and the growth potential of the business. There is also another type of business loan which are termed as Micro Loans. These loans are small loans especially for the small and the start up businesses. On submission of proper business plan including estimated financial profit, these Micro loans are granted to the small business enterprises and new business ventures. But the eligibility criterion for this loan is that, the aspiring business owner must complete business training. Other business loans which are not frequently used but should be mentioned are franchise loans and export financing. Franchise loans are those business loan which are given by franchise companies or the loans availed by the help of franchise companies. Export Financing encourages lenders to give working capital loan by ensuring the repayment of the loan within due time period.

    Line of Credit Loans are also a kind of business loan. Under these short term loans the loan amount is deposited in the business account of the borrower which he can use whenever he needs. Generally this kind of business loan is used for buying inventory and for paying operating expenses .At last; Revolving Line of Credit is something non-mentioning of which will make the discussion incomplete. Revolving Line of Credit refers to that business loan where lenders provide a specific amount of money to the business owner and allows the same amount to be borrowed again upon repayment of the first loan amount.

  • About EconomyWatch PRO INVESTOR

    The core Content Team our economy, industry, investing and personal finance reference articles.