A short-term loan that offers you funds in advance, which can be paid off within a certain time frame (as short as 1 month up to more than 100 months) depending on the loan amount. It is normally used by small and medium enterprises (SME) for short-term needs such as, to help ease cash flow, purchase assets, mask shortages of funds or it may be to secure new projects. Additional financing services are also renewable upon completion of the loan, giving businesses more options to consider should the need arise. Consequently, business loans are also viable and essential for smaller businesses as the funds needed for registering your business, utilities, inventory, upon starting up can be overwhelming.
1. Receiving funds is quick and seamless
2. Customization options that are in line with your cash flow
3. Automated repayment deduction option is available for selected banks, recommended to avoid late payment penalties
4. Fixed repayment schedule
Choosing a right business loan plan
1. Finding a bank that offers the lowest and most affordable interest rate is key
2. Even a difference of 1% could make a sizable amount of significance in helping you save on funds that can be used for other expenditures and side projects. Do seek the help of a professional if you have any doubts during your research (interest rates comparison, benefits, penalty fees) and questioning phase.
3. If both possible bank alternatives have the same amount of interest, i.e. 6%, you should go with the one that has the more flexible loan repayment scheme and lower penalty fee amount
1. You should apply for a loan at the bank with the lower penalty fee for late repayment to help ease cash flow. This is because, you may be able to pay the monthly installments on time, but there are such instances whereby you are subjected to penalties due to unforeseen circumstances that could range from problems with your bank account, getting caught up with work or even forgetting to pay on time.
2. It is important to arm yourself with information about how business loans work as some banks require you to provide security (that serve as a deposit of some sort), which include property or even your home, should you fail to repay the loan.