Commercial Loans in India, Interest Rates, Application
Commercial Loans in India
Today in this competitive world, every company wants to meet the expectation of the customer and enjoy maximum market share and make profit. Thus the employees have to slog for hours to meet the expectations of the company. Almost every individual is frustrated with the 12 hrs job and think of starting their own business. But it is not possible for all since every individual cannot become a business man.
Almost everybody appreciates the idea of setting up his/her own business. But setting up your own business requires a lot of fund. Not everyone is financially strong to start a new business. How to arrange the funds is a question?
In India, there are many financial institutions which offer Commercial Loan. Commercial Loan is the best option to meet the needs of both new and the established business. An individual with a good business plan can get Commercial Loan to start his business. Commercial Loan can be taken to meet the additional cash flow requirement of the established business.
There are many financial institutions who offer Commercial Loan. However, it should be kept in mind that before applying for a Commercial Loan you must make a business proposal. The lenders will approve you Commercial Loan only if they are satisfied that the business proposal is worth taking risk. Thus the Commercial Loan is approved on the basis of the business proposal.
It is important to keep yourself updated of the latest happenings in the Commercial Loan market. This helps you to get the best deal and that too in a hassle free manner.
Commercial loan can generally be categorized into two types:
- Secured Commercial Loan
- Unsecured Commercial Loan
Secured Commercial Loan: Secured Commercial Loan like any other secured loan requires collateral as security. The collateral can be in the form of property, equipment, machinery, etc. In case of default, the collateral is sold to recover the amount. Apart from this there are other restrictions placed by the lender in case of secured loan. They insist on a particular debt equity ratio in order to safeguard the amount lent. This affects the working of the business and also decision making. The interest rate is cheap as there is collateral in case of default.
Unsecured Commercial Loan: Unsecured Commercial Loan does not require any security. This is suitable for people who don’t want to attach the business assets to any obligation. Also individual or company with bad credit history can opt for unsecured Commercial Loan. The interest rate is high as there is no collateral in case of default. The terms and conditions are drawn through consultation between the lender and the borrower.
The amount received through Commercial Loan can be used for expansion of existing business or for commencement of new business. Some businesses use the loan proceeds as working capital. Working capital is the difference between the current assets and current liabilities. The loan proceeds can also be used to buy new machinery, equipments, upgrade technology or to restructure the finances.
Commercial Loan Interest Rates: Commercial Loan Interest Rates are calcualted on the viability and reputation, there is not sadi defined rules for it, many a times commercial loans can be as low as 4-7% and as high as 15-18%. You need to present a good plan to get the best bargian.
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