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Most of the small businesses thrive on seed money that they acquire as a loan from financial companies. There are many options when it comes to financing your business. Some of the loans that are offered are collateral free, whereas a few other financial institutions would want you to pledge assets as collateral. There are different types of small business loans that can be availed according to your needs.
Most business loans that are borrowed are term loans, either as long term loans or short term loans. If you are planning to avail loans for getting assets, like equipment or land, then you can go for long term loans. Short term loans are usually availed when there is a need for emergency funds. You can get funds for working capital requirements, equipment purchases or for other assets. Repayment of these loans can be in the form of Equated Monthly Instalments(EMIs). Line of credit is a type of loan where the lender will provide you with a pool of money from which you can withdraw funds whenever you want and you can get it at low interest rates.
Credit cash facilities are available as overdrafts and they are secured by pledging your businesses present assets. The tenure of the sanctioned loans expire every year and can be renewed. Entrepreneurs can get bank guarantees too, where a financial institute promises to cover a loss if a borrower defaults on a loan. You can also get finances for equipment needed for your business and the equipment can be used as collateral for the loan.