Startup loans are an immense way to obtain funds that can be repaid

31 Dec

How to get a Business Start-Up Loan?

Finheal
Business Loan
Tags: credit report, line of credit, start-up loans
no comments

Individuals who desire to start their own businesses but do not have the requisite funds to begin operations can move toward banks to meet their financial needs. Startup loans are an immense way to obtain funds that can be repaid to the lender at a later date. In this article, we will take a look at two of the most admired types of startup loans, viz. Line of Credit and Equipment Financing.

Line of Credit

A business startup loans in the form of a line of credit works in an alike manner with a credit card. However, the card is joined to the individual’s business in its place of their personal credit. One of the most outstanding reimbursements of a small business line of credit is that customers will have no compulsion to pay interest on the borrowed sum for the first nine to 15 months, thereby making it easier to cover expenses whilst getting their business to a good start.

For instance, if the line of credit availed is Rs. 10, 00,000, and the customer draws Rs. 2, 00,000 to cover starting expenses. In this case, the customer will only have to pay back the Rs. 2, 00,000 along with the applicable interest rate. The interest will only apply to the Rs. 2, 00,000 and not the entire sum of Rs. 10, 00,000.

Customers who look for a line of credit for their new business are necessary to have a credit score above 700. Moreover, approval from the bank can take approximately a month after the customer has furnished a thorough credit report. Though, customers need not vow any asset as security for this kind of loan.

Equipment Financing

In this type of loan for start-ups, the equipment that is bought when initial the business is pledged as collateral, thus enabling the lender to accuse a relatively low rate of interest with slightly higher risk. The customer is expected to pay back the sum used to buy the equipment as revenues are generated from their business. Similar to a line of credit, applicants are expected to have a high credit score (680+), and the documents required to avail equipment financing include a vendor quote, a detailed credit report, and a declaration viewing the manner in which the customer intends to make use of the equipment. The main advantage of equipment financing is that the reduction of the equipment can be used by the customer as a tax benefit for many years.

Share this Post

About the Author

Finheal

Persnal Loans in Cities

Home Loans in Cities

Business Loans in Cities

Car Loans in Cities

LAP in Cities

Mutual Fund in Cities

Credit Card in Cities