Loan, as we know, refers to the money lent by the lender to a borrower, for a specific period, for a percentage of interest on the principal amount when it is repaid. A loan could be subdivided into two categories: Retail Loan and Corporate Loan.
Retail Loans are given to individuals seeking funds to fulfill their financial needs or any exigencies. A retail loan could also be termed as a personal loan, educational loan, vehicle loan, gold loan, or loan against property.
Corporate Loans are those that are offered to businesses to meet their daily expenses, funding of business working capital, or for any expansion in business. Corporate Loans are also known as Business Loans. Examples of corporate loans include: term loans, infrastructure loans, or working capital loans. Corporate loans are mostly secured loans, as collateral is kept as security for the debt recovery in case of default or non-payment of the loan amount. A business loan is usually offered to those businesses that are running for 2 to 5 years and have a good credit history and track record.
Why Corporate Loan is needed: As we now know that corporate loans are meant for businesses to meet their day to day financial expenses. Sometimes, funds are needed to scale up existing business and at other times, there could be a case of diversification into other related businesses. This is where corporate loans could offer the much-needed support. Few major reasons why a business needs corporate loans are mentioned below:
· Start a new business or expand the running business
· Procure new equipment and machinery
· Meet the operating expenses like salaries, rents, utilities
· Invest to build assets such as an office building, factory, workshop, warehouse
· Procure raw materials
Types of Corporate Loans: Since we know why a business needs a corporate loan, we must now know a few types of corporate loans available in the market. As there are a lot of options available, it is important to choose the right type of loan needed for one’s business. A few of them are:
· Working Capital Loan
· Line of Credit
· Real Estate Loans
· Asset-Backed Loans
· Export Financing
· Equipment Financing
· Loan against future Lease rentals
· Finance against accounts receivables
· Short-term Loans
If your business needs a loan and you are unsure of what type of loan will suit your business requirement, finance professionals at Capital 9 are always ready to help you. To choose the most suitable type of loan for your business and resolve your queries, speak with our experts at Capital 9!