Does lack of sufficient funds been preventing you in your plans to start your dream food business? Don’t fret; there are “business loans” that would help you realize that dream. Business loans are the loans granted for the use of a business. Business Loan can be used to start a new business, expand the existing business, to buy a new machine or equipment or for any other business related activity.
Business loans can be classified as secured and unsecured. Secured Business Loan is a loan that is provided in exchange of property, machines or plants that serves as collateral such as houses, cars, savings accounts or bonds. Secured Business Loan also provides finance for working capital, which can be used to purchase raw material, paying the labor charges etc. Unsecured Business Loan is granted without keeping a property as a security with the lender.
Business Loans can be taken for short, intermediate or for a long term, it depends on you which one do you want to take and for what purpose. Short-term loans are given to businesses that need cash to start operating; this loan is granted for one or less than one year. Intermediate term loan helps businesses to buy equipments and cover initial large expenses; this is granted for a period of one to three years. Long-term loans are used to assist start-up businesses with initial costs and are granted for a period of three to seven years.
Now you would say why only, Business Loan, when other loans are available in the market.
Business Loans are tailored specially for people who want funds for their business. It also provides the flexibility to preserve your cash and working capital. Business Loan also helps in managing cash effectively by offering flexible repayment options. Capital forms an integral part of every business.
If you are planning to apply for the Business Loan you need to look into three key issues:
* Cost – You need to check the cost and risk involved in taking a loan.
* Loan Size – You need to decide the amount of loan you want that would satisfy your need.
* Payback Program – It is very important to decide at the time of taking a loan that how will you repay the loan amount and the monthly installments, otherwise it may create problems for you in future.
You can get a Business Loan from a bank or a financial institution. But shop around and search for as many lenders as you can, you can also look for online lenders. Collect quotes from various lenders and make a comparison among them to get the best deal.
When applying for a loan you need to keep in mind that you must make a loan proposal. Lenders will grant you the loan only if they find your proposal worth because no lender will be interested in taking risk. While writing a loan proposal you should always give industry-specific details so that the lender is able to know in-depth about what business do you want to start or how your present business is run and what market trends affect it.
You should also give details about the existing or proposed business, collateral which you want to keep as a security with the lender, loan repayment plans, personal financial statement and projection of your future operations.
The possibility of getting a loan will be higher if you have a good loan proposal and are able to convince the lender about your future business plans. You can get a secured business Loan if you have CCJs, arrears or bankruptcy. Your bad credit history cannot stop you from getting the cash you needed to invest in your business or to start up your own business.
Business Loan provides funds to businessmen who want to expand their business or people who want to start a business of their own. Success has no limits. Business loan provides you with the funds now it depends on how you will use this money to climb the ladder of success.