Business loan requirements are different from each other, and this is one reason there are different types of loans. In India, Small and Medium Enterprises popularly known as SMEs play a great role in economic growth of the country. It’s for this reason that lenders such as
Loan Frame provide flexible loans for SMEs. Seeing the need to boost SMEs growth, the lender has come up with loan products that are customised to meet each business loan requirement. There are different types of loans being offered today.
Term Loan as One of the Business Loans
One type of loan for business offered by Loan Frame to SMEs is Term Loan. This is for those that wish to purchase assets such as buildings, vehicles machinery or land. The tenor to pay this loan ranges from 2 to 10 years with monthly or quarterly payments. About 15 to 25% could be applicable as the minimum margin and SMEs are advised that if the repayment period exceeds 10 years, they should get sanction.
Loan against Property
If a business person has a commercial, residential property or vacant land, they can get a
loan against property. This is what Loan Frame takes as collateral and the one advantage of this loan is that the interest is low. The money from this can be used in business expansion, as working capital, in buying land or for staff salary among other reasons. To pay this loan, a business person needs to do so in monthly instalments that are fixed for tenure of 3 to 15 years.
Cash Credit Loans
For SMEs owners in India to get cash credit, they have to use book receivables or inventory as the collateral. This is the perfect loan that Loan Frame offers to finance working capital. One feature with this type of loan is your drawing power is determined by your book debt and stock. For such business loans, renewal can be done every 12 months while based on the profile of the borrower, the margin requirement is between 70 and 80 percent. The balance outstanding should in no way exceed the drawing power.
Bank Guarantee Loan
Unsecured loans are demanding, but as an SME owner in India, your bank can guarantee you. In the event that you are not able to make the full repayment, the bank guarantees the Loan Frame that the liabilities will be met. The margin requirement is determined by the profile of the SME, and it can range from 20 to 100 percent. There is no fixed tenure as this is based on requirement.
Since there are different business loans requirements, Loan Frame in India has come up with customised or tailor-made loan products. This has assured SMEs that no matter what their requirements are, they can get funded. There are many benefits to some of these products such as being easily processed, having no hidden charges, having flexibility in repayment, requiring minimal documentation and easy access. There could be an emergency, and working capital is needed, and an instant approval on loan is what a business person needs.
