Types of small business loans

First of all, it is necessary to divide loans into unsecured loans and collateral.

Unsecured crediting

Among the proposals of Russian banks are Loans that allow you to get money without securing their own property, which can then be withdrawn and sold to repay the debt. However, to obtain them, you either need to provide a guarantee of a reliable guarantor, who undertakes to repay the debt that arose due to a non-return, or to draw up a business plan that will convince bank employees of the reality that the business will bring real profit to the borrower.

Secured loan

The ability to provide collateral significantly increases the possibility of obtaining a loan. Anyone, whether immovable or movable property, deposit in this bank, equipment or real estate purchased from the loan, the company's available goods can act as collateral. However, it is not worthwhile to expect that the financial organization will take all that is possible under the security of the allocated money, besides, the value of the pledge will always be below its real price by approximately 20-30%.

Among the types of lending available for business development, there are several different in terms of volume, objectives and terms of loans:

1. Consumer credit

You can receive funds not only as a legal entity, but also as a private person. The design of consumer loans is much simpler, less is the list of required documents, it is considered faster. Among the disadvantages can be called restrictions on the amount being issued and the duration of the contract.

2. Express credit

Variety of consumer lending. Plus, that such loans do not require the provision of collateral, and the deadline for approval of the application is much shorter than in any other cases. Less are high interest rates.

3. Loan for replenishment of working capital

It is issued for specific purposes specified in the application. Most often they include payment for the goods received. It is taken at the opening of a new outlet, to expand the range and other similar purposes.

4. Project finance

Requires a detailed, detailed business plan. Thus, the purchase of equipment, expansion of business, the opening of start-ups is financed. More chances to receive money, if the received equipment is transferred to the entrepreneur under the leasing program.

5. Commercial mortgage

A special type of loans granted to companies and entrepreneurs seeking to purchase industrial real estate: warehouses, offices, retail outlets, other premises. In this case, the pledged property is purchased real estate.

6. Auto Loan

It is issued for the purchase of specific vehicles necessary for doing business. As in the case of project financing, it is easier to get a loan if the car is being leased.

7. Credits of individual entrepreneurs

It differs from those granted for LLCs and companies with other types of property in terms of financing (you can get less), the terms of repayment (it is necessary to return faster) and interest (you need to pay more). For individual entrepreneurs, a smaller package of documents is required, but the conditions under which they receive money are tougher.

Posted on June 08, 2018 at 05:56 PM