It is a known fact that every business requires a sound capital backing. Financial issues are always the main concern of all business type. Every business endeavour - big or small - requires productive ideas, planning, proper allocation of resources and intelligent funds management skills. Previously, as the credit market was scattered, unplanned and uncontrolled, getting loan support was a wearisome task. However, over the years, the market has changed a great deal, and many regulatory bodies at national and international level have come up. As a result, the entire loaning business has become very organised and competitive.
Like any other loan, a business loan too is broadly categorised as secured and unsecured loans. A secured business loan requires some collateral for the loan amount. In return, it ensures lower interest rates and chosen repayment terms. It is the most ideal option when one needs a greater loan amount. The only catch is that the borrower may lose his collateral in case he fails to pay back.
An unsecured business loan, recommended for short-term needs, does not require any collateral. But, it comes at a slightly higher interest rate and fixed repayment terms. It is a safe alternative for the borrower, as there are no immediate risks involved. Legal action is the only way a lender can deal with a defaulter. There a variety of other business loan types available in the market. Some of the most popular or common ones are:
* New business loans
* Small business loans or Micro business loans
* Commercial real estate loans
* Franchise start-up loan
* Business acquisitions loans
* Equipment financing loans
* Construction financing loans
* Equipment leasing loans
And, there are many more... The purpose of designing diverse business loans is to save the valuable time of entrepreneurs by targeting their specific needs. Following the principle of demand and supply, professional lenders are increasingly doing market surveys to understand the most common reasons for which a business enterprise applies for credit. This approach has resulted in increased competition in the loan bazaar. Hence, borrowers should do suitable research on their part to figure out the most befitting deal for their venture.
