How Many Types of Business Loans You Know

Business loans come in various forms, catering to different financial needs and situations of businesses. Here are some common types of business loans:

  1. Term Loans:
    • Term loans involve borrowing a lump sum amount for a specific term. Businesses repay the loan in regular installments, and the interest rate can be fixed or variable.
  2. Working Capital Loans:
    • Working capital loans provide funds to cover a business’s day-to-day operational expenses, such as salaries, inventory, and utility bills. These loans help maintain smooth business operations.
  3. Equipment Loans:
    • Equipment loans are used to finance the purchase of machinery, technology, vehicles, or other equipment essential for business operations. The equipment itself often serves as collateral.
  4. Commercial Real Estate Loans:
    • These loans are designed to help businesses purchase, refinance, or improve commercial properties. They may be secured by the property being financed.
  5. Invoice Financing (Accounts Receivable Financing):
    • Invoice financing allows businesses to borrow against their outstanding invoices. It provides immediate cash flow by advancing funds tied up in unpaid invoices.
  6. Business Lines of Credit:
    • A business line of credit offers a revolving credit limit that businesses can draw from as needed. It’s a flexible financing option for managing short-term cash flow needs.
  7. Merchant Cash Advances:
    • Merchant cash advances provide a lump sum upfront in exchange for a percentage of daily credit card sales. Repayments are made as a percentage of daily sales.
  8. SBA Loans (Small Business Administration Loans):
    • SBA loans are government-backed loans with favorable terms. They include various programs such as 7(a) loans, CDC/504 loans, and microloans, providing financial assistance to small businesses.
  9. Business Credit Cards:
    • Business credit cards are revolving credit lines that businesses can use for various expenses. They often come with rewards programs and benefits.
  10. Franchise Loans:
    • Franchise loans are tailored for businesses looking to buy a franchise. They may cover franchise fees, equipment, and other startup costs.
  11. Start-Up Loans:
    • Start-up loans provide capital for new businesses to cover initial expenses like equipment, marketing, and working capital.
  12. Bridge Loans:
    • Bridge loans offer short-term financing to cover immediate needs, often used during a transition or while waiting for long-term financing.
  13. Microloans:
    • Microloans are small loans typically provided by microfinance institutions to entrepreneurs, especially in developing economies, for small-scale businesses.
  14. Trade Finance:
    • Trade finance includes various financial instruments and products to facilitate international trade, such as letters of credit, export financing, and import financing.
  15. Consolidation Loans:
    • Consolidation loans help businesses consolidate multiple debts into a single loan with potentially lower interest rates and simplified repayment terms.
  16. Peer-to-Peer (P2P) Business Loans:
    • P2P lending platforms connect businesses with individual lenders, allowing them to borrow directly from investors.

Business owners should carefully evaluate their financial needs, terms, and repayment capabilities before choosing a specific type of business loan. Additionally, the terms and availability of these loans can vary based on factors such as the business’s creditworthiness, industry, and the lender’s policies

All details on Credit-Linked Capital Subsidy Scheme

Credit Linked Capital Subsidy Scheme or CLCSS is meant for MSMEs. It has been introduced by the Ministry of Micro, Small and Medium Enterprises to boost production of small scale industries by providing them access to subsidised capital. Under this scheme, eligible enterprises can enjoy a capital subsidy of 15% on loan availed from a financial institution. 

Main Objective of Credit-Linked Capital Subsidy Scheme

he objective of the Scheme is to facilitate technology up-gradation in MSEs by providing an upfront capital subsidy of 15 per cent (on institutional finance of upto Rs 1 crore availed by them) for induction of well-established and improved technology in the specified 51 sub-sectors/products approved.

  1. Financial Support:
    • The scheme provides a subsidy linked to the credit availed for the purchase of eligible machinery and equipment.
  2. Eligibility:
    • Small-Scale Industries (SSI) and Small and Medium Enterprises (SMEs) are typically eligible for the CLCSS.
  3. Scope:
    • The scheme covers various sectors, and the list of eligible machinery and equipment is outlined by the government.
  4. Implementation:
    • Financial institutions and banks play a crucial role in implementing the scheme. They provide credit linked with the subsidy.
  5. Application Process:
    • Entrepreneurs or business owners interested in availing the benefits of CLCSS usually need to apply through the participating financial institutions.
  6. Subsidy Amount:
    • The subsidy is calculated as a percentage of the eligible investment in plant and machinery, subject to a maximum limit.
  7. Technology Upgradation:
    • The scheme encourages businesses to adopt new and improved technologies, thereby enhancing productivity and efficiency.
  8. National Small Industries Corporation (NSIC):
    • NSIC, a government agency, is often involved in the implementation and monitoring of the scheme.

It’s important to check the latest guidelines, eligibility criteria, and subsidy rates as they may have been updated or modified after my last knowledge update. For the most recent and accurate information, you should refer to the official government websites or contact relevant government departments or financial institutions

How to Get Instant Personal Loan for CIBIL Defaulters

Finding yourself in a situation where you need an urgent Personal Loan as a CIBIL defaulter can be tricky at times. But worry not because we are here to guide you.

Ways to Avail Personal Loans for CIBIL Defaulters

We understand the unique circumstances faced by CIBIL defaulters and provide viable solutions. Here are some of the ways you can use to get a Personal Loan in case of CIBIL defaults-

1. Seek out specialised lenders

Look for financial institutions or lenders specialising in providing loans tailored to CIBIL defaulters. Hero FinCorp understands the unique circumstances and challenges individuals with a history of CIBIL defaults face, making them more likely to offer suitable loan options.

2. Explore loan options tailored for CIBIL defaulters

We have customised offers for CIBIL defaulters. However, you might get lower amounts at higher interest rates in such cases.

3. Provide collateral or opt for a secured loan

Offering collateral, such as property or assets, can increase the chances of loan approval for CIBIL defaulters. Lenders may be more willing to extend credit when they have an asset to secure the loan against.

4. Improve creditworthiness through timely payments

Take steps to improve your creditworthiness by making timely payments on existing debts. Demonstrating responsible financial behaviour over time can help rebuild your credit history and increase your chances of getting approved for a personal loan.

5. Consider a co-applicant or guarantor

Including a co-applicant or guarantor with a good credit history can enhance your chances. The lender may consider their creditworthiness and income stability, reducing the perceived risk and increasing the likelihood of loan approval.

How to Find out and Remove Your Name from the CIBIL Defaulter List?

Finding out if your name is on the CIBIL defaulter list and taking steps to remove it is crucial for taking necessary actions to improve it. Here’s how you can do it-

● To begin, you can obtain your credit report from CIBIL by visiting their official website and following the necessary procedures. The report will provide insights into your credit history, including any defaults.

● If you discover that your name is on the defaulter list, rectification is next. Contact the lender involved and settle any outstanding dues or negotiate a repayment plan.

● Once the dues are cleared, the lender will update CIBIL accordingly.

● Regularly monitoring your credit report and maintaining healthy credit habits will ensure a positive credit profile and increase your chances of being removed from the lsit

All About MSME Loans

An MSME loan or an SME loan is a credit facility extended by banks, small finance banks, and non-bank finance companies such as IIFL Finance to micro, small, and medium enterprises.

MSME loans are either unsecured or secured loans given by financial institutions to meet various expenses to businesses as well as individuals, sole proprietors and partnership firms. Startups are also eligible for MSME loans.

These loans can be availed for a wide range of purposes, including for investments in plant and machinery, buying inventory, and making payments to staff or vendors.

Main Features of MSME Loan

Loan amount: MSME loans can be of varying amounts depending on the requirement of businesses. Most banks and NBFCs provide loans starting from Rs. 50,000. The loans can go up to Rs. 10 crore or even higher

No collateral: Lenders do not seek any collateral for unsecured MSME loans, and hence small business owners don’t have to worry about providing any security. Secured loans, however, do require a collateral

Flexible repayment: Banks and non-bank finance companies provide flexible repayment options for the repayment of MSME loans. The tenure is designed based on the cash flows and other receivables. Usually, the tenure ranges from one to five years but it can be mutually decided by the lender and borrowers. There is also an option for part-prepayment.

Digital application: The MSME loan can be applied for online, cutting down on the hassle of paperwork, which often results in delays in availing loans. Most lenders provide an end-to-end digital application process

Approval process: Once all the documents are submitted, lenders undertake a verification exercise. Post that, the MSME loan amount is disbursed within three-four days of the application

Processing fees: Borrowers may have to pay charges such as processing fees, which usually range between 2-3% of the loan amount. There are no other hidden charges levied on borrowers.

Interest Rates: It has a lower rate of interest starting from 7.65% per annum. However it varies from lender to lender.

What is Commercial Vehicle Loan?

A Commercial Vehicle Loan is a secured loan that assists you in purchasing any commercial vehicle essential for your transport business.

Are your looking to purchase passenger car cab or taxi and earn with companies like OLA, Uber? Do have plans to start or expand your goods transport vehicles fleet of trucks, tankers, Buses? Then, you have come to the right place. Here you will get all the loan details in one place.

How many types of commercial vehicle loans are there?

  • New
  • Used/ refinance/ re-purchase finance
  • Balance transfer
  • Top-up loans

Which type of Vehicle you can purchase?

Get commercial vehicle finance on wide range of vehicles – ranging from 1.5-tonne to 49-tonne GVW (Gross Vehicle Weight):

Cab- Passanger Car- 5/7 seater

Buses

  • Intracity
  • Intercity
  • School and college bus
  • Staff bus

Trucks

  • Small truck
  • Light truck
  • Medium truck
  • Heavy truck
  • Customised truck

Tankers

  • Milk tanker
  • Water tanker
  • Oil tanker
  • Chemical tanker
  • Petroleum tanker
  • Gas tanker

Tippers

Transit mixers

Tempos

Which manufacturer is your best for you?

Purchase your commercial vehicle from some of the best Indian automobile companies

  • Tata Motors
  • Eicher Motors
  • Volvo
  • Mahindra Navistar
  • MAN
  • AMW
  • Mahindra & Mahindra
  • Swaraj Mazda
  • Bajaj Tempo
  • Ashok Leyland

Who Can Avail Commercial Car Loans?

Banks and other lenders offer commercial car loan to a broad array of customers to meet their business needs. In other words, this type of vehicle loan can be availed by various segments of customers having diverse profiles. Here is the list of the consumers considered to be eligible for this loan:

  • Individuals
  • First-time users and buyers
  • Small, medium and large-sized fleet owners
  • Proprietorship firms and Partnership firms
  • Public Limited & Private Limited Companies
  • Trusts and societies
  • Schools and colleges
  • Captive customers and transporters

Salaried and self-employed individuals can co-apply for a commercial vehicle loan with blood relatives or family members. On the other hand, the partners in partnership firms and the directors in private limited companies can jointly apply for this loan.

Benefits of a Commercial Vehicle Loan

Commercial vehicle loan stands out to be the most preferred option for borrowers who are either intending to buy their first commercial vehicle or planning to add a new vehicle to their existing fleet of commercial vehicles due to the plethora of benefits that it offers.  Some of the main features of commercial vehicle loans are mentioned below:

  • Flexible Repayment Tenure: Usually, the repayment tenure offered in commercial car loan is up to 5 years. This ensures low EMI amount to the borrowers enabling them to pay off the EMIs without any undue financial burden.
  • Multiple Vehicle Financing: Whether you are an individual borrower or a fleet owner, you can get finance for a variety of vehicles such as tippers, trucks, buses, trailers, tankers, and other small and light commercial vehicles to grow your business.
  • Easy Processing: The process of applying for a commercial vehicle loan is easy, fast and convenient. After the submission of all the required documents, banks usually take 4-5 days to process a new or used vehicle loan application.
  • Simple Documentation: Commercial vehicle loans come with a hassle-free and quick documentation process. The users can easily upload all the mandated documents online without visiting the bank directly.
  • No Credit-Score Compulsion: Unlikely other loans, commercial vehicle loans don’t require any existing credit score. Borrowers having low or even zero credit score can avail a commercial vehicle loan with ease.
  • Caters to Multiple Needs: The loan schemes are designed to cater to the borrowers’ diverse requirements including new and used vehicle financing, top up on existing loan and refinancing of loans/vehicles for working capital.
  • Customised Solutions: In order to meet the specific requirements of the customers, every commercial vehicle loan scheme is customised according to the vehicle type, loan duration and financial ability of each individual borrower.