What Are The Three Main Types Of Financing For Businesses?

There are many different kinds of business funding available in India. The three main financing types are:

• Working Capital Loans
• Equipment Loans
• SME & MSME Loans

Working Capital Loans are primarily business loans availed to meet the working capital needs of the company. They are used to meet day to day business expenses and to acquire raw materials and assets for the company to keep the business running.

Equipment loans, as the name suggests, allow you to purchase and acquire machinery and other technologies required for your business. These necessarily need not be huge machinery. You can use it to buy equipment and machines for your administrative offices too; like computers, printers, scanners, etc.

SME & MSME Loans are a segment of their own catering to the small scale and medium scale industries. This segment not only covers loans from banks and NBFCs. They also include the various credit schemes introduced by the government on a regular basis. Some of the MSME schemes are PMMY Mudra Yojana, CGTMSE credit scheme, Credit Linked Capital Subsidy Scheme (CLCSS), etc.

Points to Remember: Business Loans are used by industries, merchants, and corporations to meet their business financing needs. Working capital needs, trade finance, finance to buy raw materials, finance to acquire assets, credit for business expansion or upgrade, non-fund based credits with banks to avail revolving credit, and so on are all ways that business financing can assist business owners. A number of banks and non-banking financial companies (NBFCs) provide business loans to qualified entrepreneurs and business owners. Business loans offer appealing benefits such as competitive interest rates, minimum documentation, and faster disbursement. As previously stated, having the right amount of finance at the right time is critical.