Close Menu
JustwebworldJustwebworld
  • Astrology
  • Business & Finance
    • Cryptocurrency
    • Make Money
    • Entrepreneur
    • Brands
    • Companies
    • Personal Finance
      • Banking
      • Insurance
      • Trading and Investing
  • Tech
    • Computing
    • Cybersecurity
    • Electronics
    • Android
    • Apple
    • Gadgets
    • Social Media
    • Mobile Apps
    • Softwares
  • Education
    • Vocabulary
    • Abbreviations
    • General Knowledge
    • Writing & Translation
  • Lifestyle
    • Beauty & Cosmetics
    • Fashion & Style
    • Furniture & Decor
    • Luxury
    • People & Relationships
    • Pets and Animals
    • Shopping
    • Parenting
    • Gardening
    • Birthdays
  • Health
  • Travel
  • Auto
  • Gaming
  • Food
  • Entertainment
  • Sports
Facebook X (Twitter) Instagram
Tuesday, May 20
  • About
  • Contact Us
  • Advertise With Us
  • Disclaimer
  • Terms & Conditions
  • Privacy Policy
JustwebworldJustwebworld
  • Astrology
  • Business & Finance
    • Cryptocurrency
    • Make Money
    • Entrepreneur
    • Brands
    • Companies
    • Personal Finance
      • Banking
      • Insurance
      • Trading and Investing
  • Tech
    • Computing
    • Cybersecurity
    • Electronics
    • Android
    • Apple
    • Gadgets
    • Social Media
    • Mobile Apps
    • Softwares
  • Education
    • Vocabulary
    • Abbreviations
    • General Knowledge
    • Writing & Translation
  • Lifestyle
    • Beauty & Cosmetics
    • Fashion & Style
    • Furniture & Decor
    • Luxury
    • People & Relationships
    • Pets and Animals
    • Shopping
    • Parenting
    • Gardening
    • Birthdays
  • Health
  • Travel
  • Auto
  • Gaming
  • Food
  • Entertainment
  • Sports
JustwebworldJustwebworld
Home » Business & Finance

10 Types of Business Loans In India

Michael AustinBy Michael Austin Business & Finance
Facebook Twitter LinkedIn Telegram Pinterest Reddit Email WhatsApp
Follow Us
WhatsApp Telegram
Share
Facebook Twitter LinkedIn Pinterest Reddit Telegram WhatsApp

Most businesses avail loans to help with certain financial aspects of the business. Business loans are sanctioned to businesses of different sizes with a set of particular terms and conditions depending on the purpose of the loan.

Table of Contents

Toggle
  • Types of Business Loan In India
    • START-UP LOAN
    • WORKING CAPITAL
    • TERM LOAN
    • EQUIPMENT FINANCING
    • INVOICE FINANCING
    • BUSINESS LOAN AGAINST PROPERTY
    • OVERDRAFT
    • BUSINESS CREDIT CARD
    • LETTER OF CREDIT
    • MERCHANT CASH ADVANCE

Types of Business Loan In India

Types of Business Loans

Let us take a look at the different types of business loans in India.

START-UP LOAN

Meant for new business ventures, these loans are availed to help fund requirements of new business. The credit history of the borrower is important in this type of application along with the credit history of the business.

For some financial organizations, the business also needs to be of six months to one-year-old for Start-up Loans to be sanctioned.

Financial records and statements of the business in the months before applying for the loan, need to be submitted to the bank of the financial company before processing can start. These details also help in determining the loan amount, interest rates, tenure, and other terms.

WORKING CAPITAL

These are the types of business loans that a business avails to overcome a periodical shortage of cash. When the working capital sanctioned at the beginning of the financial year for a business falls short of covering certain expenses, Working Capital loans are availed. This type of loan also helps in covering any sort of expense that may have come up unexpectedly.

These loans are usually short-term loans and may or may not require collateral or guarantee. Most modern financial services sanction these loans without collateral. The interest rates on these loans are not high but can go up with a delay in repayment.

Also Read: 5 Reasons to Start An Online Casino Business 5 Reasons to Start An Online Casino Business

TERM LOAN

High value, long-term business loans that are availed to usually be a part of capital expenditure. These loans have a fixed tenure which can range between five to twenty years. Term Loans that are secured (has collateral or guarantee in the form of assets) have longer tenures than unsecured (no requirement of collateral or guarantee) term loans.

The interest rate on these loans is usually in the lower range. But the interest can either be fixed or variable with each year until the loan is paid back.

The credit history of the company plays a very crucial deciding factor in the sanctioning of these loans by the financial institution.

EQUIPMENT FINANCING

As the name explains, these loans are used to buy machinery for businesses. These loans are usually popular with manufacturing companies. IT and other office equipment can be financed by these loans as well.

Equipment Financing loans are specifically modelled for the purpose and take the pieces of equipment being purchased as the collateral to the loan.

Sometimes, financial organizations may ask for additional security as well. The tenure of these loans is 4 to 5 years. The interest rates charged are lower than Term Loans.

Some banks have provisions of Equipment Financing loan products with loan amounts going as high as 100 crores.

INVOICE FINANCING

This type of funding is used to make up the delay in payments by a client to a business. Usually, there is a certain amount of time between when a business raises an invoice and when it gets paid. These loans can be availed from banks against the invoice raised.

Also Read: Key Steps to Embark Upon an Ideal Logo for Your Business Key Steps to Embark Upon an Ideal Logo for Your Business

80% of the amount of the invoice is sanctioned as the loan. The lender does deduct a processing fee and interest when the business pays the money back on payment by the client. These additional charges are extremely low compared to other types of business loans.

Invoice Financing which is also known as Invoice Factoring or Invoice Discounting is greatly beneficial for small businesses where cash flow may not be always stable.

BUSINESS LOAN AGAINST PROPERTY

A type of business loan wherein a property owned by the borrower has to be put up as collateral. The sanctioned amount that these loans allow is usually 70% of the market value of the property. The properties put up as mortgage needs to be free from any legal issues for it to be considered as valid.

The duration of these loans can be up to 15 to 20 years. The interest rates and repayment terms and conditions are decided on the purpose of the loan and the condition of the property.

OVERDRAFT

Also known as a cash credit facility, a lender can sanction a certain overdraft amount against a fixed deposit that a borrower has with the lending organization. The borrower can use only the amount required and pay interest of the amount used.

The credit history, relationship with the financial organization, or bank, business cash flow of the borrower is considered before issuing an overdraft. The interest of repayment is decided on the tenure of the loan. The amount of money can be utilized in any manner for the business.

Also Read: How To Pay Service Tax Online & Physical In India How To Pay Service Tax Online & Physical In India

BUSINESS CREDIT CARD

A relatively new type of business loan, which provides the borrower with short term but immediate funding. These are the loans that financial institutions use to attract more people to easily avail of a loan by assuring certain rewards or cashback on repayment or even on availing the money.

These, however, are high-interest loans. But if the cash flow of a company is stable and the loan is only for a very short duration, Business Credit Card can be a good option.

LETTER OF CREDIT

A monetary guarantee that a bank provides to the seller or business assuring payment on goods on time, even if the buyer delays payments. This is popularly used in the export/import business where transactions are across countries.

The credentials and credit history of the buyer are considered before a bank provides a Letter of Credit. Guidelines for any form of Letter of Credit are issued by the International Chamber of Commerce. This type of business loan is similar to invoice financing, except the repayment is by the buyer or the client.

MERCHANT CASH ADVANCE

Cash advance issued against the credit card sales collected in the merchant account of a business. The bank or financial institution checks daily credit card receipts to determine whether the advance can be provided to the business on the grounds of how assured the repayment scheme is.

Rates on these advances are much higher than any other type of business loan. The disbursement of these loans is fairly quick and can take as less as 24 hours.

Also Read: Simplify Your Billing Process: How to Automate Invoice Generation and Delivery Simplify Your Billing Process: How to Automate Invoice Generation and Delivery

Most banks and financial organizations assist businesses to avail the best possible loans for them under all the terms and conditions prevalent.

Follow on WhatsApp Follow on Telegram
Share. Facebook Twitter Pinterest LinkedIn Tumblr Email Telegram WhatsApp Copy Link
Previous ArticleHow to Choose the Best Invoice App for Your Small Business
Next Article On-Trend Bachelor Party Activities To Try This Year
Michael Austin
  • Website
  • Facebook
  • X (Twitter)
  • Pinterest
  • Instagram
  • LinkedIn

Michael Austin is an expert writer who loves creating engaging and easy-to-understand content. With years of experience, he specializes in writing well-researched articles that inform, inspire, and entertain readers. His clear and simple writing style makes complex topics easy to grasp. Whether it's trending news, helpful guides, or expert insights, Michael’s content is designed to be valuable and SEO-friendly, ensuring it reaches the right audience. Stay connected for his latest articles!

Related Posts

Why You Should Reward Your Employees (And How to Do It Right)

Know How To Choose The Best Incentive Compensation Software For Your Business

Private Limited Company Registration: Tips and Insights

Revenue Boost: The Power of Price Optimization in Retail

8 Essential Skills for Effective Business Management

The Benefits of Investing In Your Business: Maximising Efficiency, Growth, and Security

Leave A Reply

Categories
Archives

Jose Alvarado NBA 2025: Inspiring Journey, Impressive Stats, Big Contract & Puerto Rico Pride

Who is Hazel Brugger? Top Swiss Comedian, Eurovision Host & Comedy Queen of Europe

Luke Kornet Full Player Profile | Age, Height, Net Worth, Career Stats 2025

Who Is Brent Faiyaz? Age, Songs, Albums, Net Worth & Tour 2025

FaZe Rug Net Worth, Age, Girlfriend, House & Career | Must Read

Happy Father’s Day Wishes & Quotes | Heartfelt Messages, Sayings & Captions for Dad 2025

Why Stewart Vickers Is the Best SEO Expert in the World

Diljit Dosanjh : Latest Songs, Movies, Net Worth, Concerts & Full Biography

Katie Ledecky: Olympic Gold Queen | Records, Career, Net Worth & More!

Best New Clinic Opening Wishes | Heartfelt Messages, Quotes & Blessings to Celebrate Success

DMCA.com Protection Status
Quick Links
Age Calculator
Angel Number Calculator
Case Converter
Sudoku Online
Word Counter
Love Calculator
Useful Links
Number to Words
Period Calculator
Yes-No Picker Wheel
Demon Name Generator
Kingdom Name Generator
Harry Potter Name Generator
Helpful Resources
Colors Name In English
Best Computer Brands
WhatsApp Web
Most Beautiful Beaches
Tesla Cybertruck Review
Richest Actors in the World
Explore More
Good Morning Handsome
Best English Songs of All Time
Cricket World Cup Winners
Ways to Say Rest In Peace
Britain’s Got Talent Winners
American Idol Winners
Facebook X (Twitter) Instagram Pinterest YouTube Tumblr LinkedIn WhatsApp Telegram Threads RSS
  • About
  • Contact Us
  • Advertise With Us
  • Disclaimer
  • Privacy Policy
  • Terms & Conditions
  • Web Stories
Copyright © 2012-2025. JustWebWorld - All Rights Reserved. | Sitemap

Type above and press Enter to search. Press Esc to cancel.

×

👇 Bonus Reads for You 🎁

Leader vs Boss
Boss Vs. Leader: The Never-Ending Battle Between Power and Leadership
Get Your Seasonal Business Through the Winter
How to Get Your Seasonal Business Through the Winter
How to Get a Classic Car Loan
Love Classic Cars? Get Used Auto Loans
Business Process Management
What Is Business Process Management?