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 About Pradhan Mantri Rozgar Yojana (PMRY)

Pradhan Mantri Rozgar Yojana (PMRY) was a government scheme in India aimed at promoting self-employment among educated unemployed youth. Please note that schemes and policies may be subject to updates, changes, or new iterations, and it’s advisable to check with official government sources for the latest information. Below are the key details about PMRY based on information available up to my last update:

Objective:

  • PMRY aimed to provide financial assistance to educated unemployed youth for setting up small enterprises or businesses, thereby creating self-employment opportunities.

Implementing Agencies:

  • The scheme was implemented by the District Industries Centers (DICs) in collaboration with other concerned agencies at the district level.

Financial Assistance:

  • PMRY provided financial assistance in the form of a subsidy and bank credit. The subsidy component was intended to supplement the bank credit and varied based on the nature of the project.

Eligibility Criteria:

  • Individuals in the age group of 18 to 35 years who were educated up to at least the 8th standard were eligible to apply.
  • The annual family income of the beneficiary was considered for determining eligibility.

Nature of Projects:

  • PMRY supported a wide range of economically viable and technically feasible projects in the manufacturing, service, and business sectors.

Subsidy Component:

  • The subsidy amount under PMRY was a certain percentage of the project cost, subject to a maximum limit. This subsidy was intended to encourage entrepreneurship and make it easier for beneficiaries to establish their businesses.

Bank Loan:

  • The financial assistance provided under PMRY included a bank loan component. The loan amount was determined based on the project cost and the contribution of the beneficiary.

Training Component:

  • To enhance the entrepreneurial skills of the beneficiaries, training was an integral part of PMRY. Candidates were required to undergo skill development training before setting up their enterprises.

Application Process:

  • Interested candidates could apply through the District Industries Centers (DICs) by submitting project proposals. These proposals were then scrutinized for technical and financial feasibility.

Monitoring and Implementation:

  • The implementation and monitoring of the scheme were carried out at the district level. Regular follow-ups were conducted to ensure the successful establishment and functioning of enterprises.

It’s important to note that the information provided here is based on the status of the scheme as of my last update in January 2022. Given that government policies and schemes may undergo changes, I recommend checking with official government sources or the Ministry of Micro, Small and Medium Enterprises (MSME) for the latest and most accurate information regarding the Pradhan Mantri Rozgar Yojana (PMRY).

All About Prime Minister’s Employment Generation Programme (PMEGP)

he Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy program initiated by the Ministry of Micro, Small and Medium Enterprises (MSME), Government of India. Launched in 2008, PMEGP aims to generate employment opportunities in rural and urban areas by promoting entrepreneurship and the establishment of micro-enterprises and small businesses. The program provides financial support and skill development training to individuals interested in starting their own ventures.

Here are the key features and details about the Prime Minister’s Employment Generation Programme (PMEGP):

  1. Objective:
    • The primary objective of PMEGP is to create sustainable employment opportunities in both rural and urban areas by facilitating the establishment of new micro-enterprises and small businesses.
  2. Implementing Agencies:
    • PMEGP is implemented through the Khadi and Village Industries Commission (KVIC) at the national level, the State Khadi and Village Industries Boards (KVIBs) at the state level, and the District Industries Centers (DICs) at the district level.
  3. Categories of Loans:
    • PMEGP provides financial assistance in the form of a composite loan comprising both the term loan and the working capital for setting up new projects. The scheme classifies projects into three categories based on the cost of the project:
      • Manufacturing Sector: Up to Rs. 25 lakhs
      • Service Sector: Up to Rs. 10 lakhs
  4. Subsidy and Funding Pattern:
    • The funding pattern under PMEGP involves a subsidy component and a margin money contribution from the entrepreneur. The subsidy is provided at different rates for different categories and is linked to the cost of the project.
      • Urban Areas: General category – 15%, Special category (SC/ST/Women/Ex-Servicemen/PH) – 25%
      • Rural Areas: General category – 25%, Special category – 35%
  5. Eligibility Criteria:
    • Individuals above 18 years of age are eligible to apply. The scheme is open to all categories, but preference is given to women, SC/ST, OBC, minorities, ex-servicemen, and physically handicapped individuals.
  6. Skill Development Training:
    • Applicants are encouraged to undergo skill development training related to their chosen business activity. Training is usually provided by government-approved training institutions.
  7. Application Process:
    • Interested individuals can apply for PMEGP loans through online or offline modes. They can submit their project proposals to the respective District Industries Centers (DICs) or other designated agencies.
  8. Project Approval:
    • After scrutiny and verification, the project proposals are approved at the district level by the District Task Force Committee.
  9. Monitoring and Implementation:
    • The implementation and monitoring of PMEGP projects are done through the respective KVIBs and DICs. Regular monitoring is conducted to ensure the proper utilization of funds and the success of the enterprises.
  10. Repayment Period:
    • The repayment period for the composite loan is typically 3 to 7 years, depending on the nature of the project and the repayment capacity of the entrepreneur.
  11. Promotion of Khadi and Village Industries:
    • PMEGP also contributes to the promotion of traditional Khadi and Village Industries, aligning with the government’s focus on sustainable and rural development.

Entrepreneurs interested in availing benefits under the Prime Minister’s Employment Generation Programme should refer to the official PMEGP guidelines and contact the relevant implementing agencies for the most accurate and up-to-date information.

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

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.