Business Loans: A new financial tool to start the business

                                

Many banks and financial institutions provide loans to the business person for meeting their business requirements, to initiate business, for expansion of the business, etc. They are providing these loans at reasonable interest rate with flexible guidelines.

The customer can avail this loan up to Rs.25lacs and for a maximum tenure of 5years. This loan is also known as commercial loans. Banks provide this loan at lucrative interest rate, i.e. from 15% to 22%. Business loan is an offer to the business person, self employed professional and traders. They can avail this loan for the expansion of their business or the establishment of their business. Business Loans are same of personal loans, as it is also given on the customer creditability, repaying ability and on his financial background.

The customer can avail this loan only if they meet the eligibility criteria of the business loan. The criteria for eligibility are: the person must have a past record of loan repayment, have financial standing and most essential are that the person has the ability of repaying the loan amount. If an individual satisfies these criteria, then only the person is eligible for availing the loan.

Business loans are of two types, i.e. an unsecured business loan and a secured business loan. A secured business loan means that in which the borrower has to give any collateral for availing the loan. The interest rate is also low in it, as the risk of lending is low. In case of an unsecured business loan, the customer does not have to give any collateral to the lender for availing this loan. This loan is given on the creditability of the customer. The interest rate is also high, as the risk of lending loan is high. The tenure of an unsecured loan is usually short.

Business loan is also availed by the self employed professionals, i.e. doctors, chartered accountant, interior decorator, company secretary, architect, etc. It is the best option for professionals. Banks normally provide loan from Rs.25000 to Rs.25lacs. Though, the person has to satisfy the eligibility criteria for availing the business loan. The person can repay the amount through EMI. The interest rate of business loan is usually a fixed, i.e. the interest rate does not fluctuate with the market conditions.

The banks provide various types of business loan to individuals or traders, as for establishing the business or for expansion of the business; the cost of investment is large. The terms and conditions are also slightly different from the professional loans. One can avail this loan from any banks and financial institutions.