Business Finance Loans


The world of business is an exciting one indeed. And starting your own business venture is even more enthralling. There are many aspects which make the game of business so exciting. The whole idea of coming up with a plan, modifying it to customers’ taste, doing a market research for your product and outdoing your competition to come out on top is what makes business more challenging and gratifying. The only difference is- this board game is played with real money. And therefore, you need to be thoroughly prepared before you go ahead with your business idea.

There are various factors which go into making a business venture successful. Having a good product is just one of them. There is also the timing of the launch of the product, the marketing strategies, the management and so on. But the problem most entrepreneurs face is not related to any of the things above. Hundreds of people around the globe, with rosy dreams about their business face the problem of business finance loans. Business finance is the key factor for any business to flourish; reason being that to start any kind of business you need money.

Business finance loans are a hard nut to crack. Most people do not have any clue how to go about securing a business finance loan. To understand the process of getting business finance loans, you first need to know about the various types of business finance loans. The business finance loans can be categorised into the following:

  • Secured Loans  – This type of business finance loans are generally the easiest to get. Secured loans are loans where the borrower guarantees his or her assets as collateral against the money being borrowed. Collateral is a property or an asset which can be taken into possession by the creditor in case of default. For example- if you need $100,000 secured loans as part of business finance loan, you can give your house as collateral against the loan. In case you default on the monthly payments of interest, your house will be taken over by the creditor. Banking institutions deal in this type of business finance loans. Secured loans are further divided into mortgage loans, non-recourse loans and foreclosure.
  • Unsecured Loans – As the name suggests, this kind of business finance loans is completely opposite to secured loans. In this case, the creditor does not have any security against the loan he or she is providing. Unsecured business finance loans are the hardest to secure because of the absence of security. That said, they are also the cheapest. To get an unsecured business finance loan, the most important factor that counts is the credit rating of your business. Credit rating is the analysis of your company’s ability to repay loans. A sound financial health ensures a healthy credit rating, which is determined by specialised credit rating agencies.
  • Start Up Loans – The name says it all. This kind of business finance loans are meant for new ventures or start ups. There are many angel networks which help young entrepreneurs start up a business by providing them with financial health. However, getting start up business finance loans is far from a cinch. The vital factor which could tilt the balance in your favour is clarity. You should be clear about all the aspects related to your business model. Communicating that clarity to the financer can help you get the desired help. Your debt repayment ability is also taken into consideration before granting business finance loan for start ups. Hence, it may be a good idea to find a guarantor. A guarantor is a person who takes a guarantee on your behalf that the debt will be repaid. A guarantor should have a sound financial health and running income to be effective in the process of securing business finance loan.
  • Business only loan- This category of business finance loans is availed solely for business purposes. You cannot use this money for personal credit until you are in a position to repay the entire amount.
  • Business Acquisition Loans – Another category of business finance loans is the business acquisition loans. These type of loans are meant for the takeover or acquisition process. A very popular type of business acquisition loans is leveraged loans. Leveraged business finance loans are taken by a company which is looking to acquire new business. In most cases, the company applying for the loan is self sufficient to meet the expenses of the takeover but nevertheless, decides to take a business finance loan.

These are some of the different types of business finance loans. But very often, people are turned down for a loan request because they have bad credit or they lack enough collateral to put up as security. If you are one of those, you do not need to fret about your business finance loan anymore. A group of individuals have come up with an innovative way to help people with bad credit. This alternative to business finance loan is called merchant cash advance. Merchant cash advance advances money to merchants based on the receivables on their credit cards. They then use the credit cards to pay the amount back. As a merchant you get a couple of advantages with this alternative to business finance loan. First, it eliminates the collateral scenario from the equation of business finance loan. After all, let us face it- everyone does not have a house or gold worth thousands to show as collateral. Secondly, there are no constraints involved pertaining to the use of funds. Very often, banking institutions, before finalising a business finance loan, make you sign a letter of content pertaining to the use of funds. Any deviation from the content could land you in jail as a defaulter. Such a scenario is eliminated with merchant cash advance.

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