Lenders at Lenbor offer SME loans not only for buying a house but also for a variety of other purposes. Popular types of SME loans available with us are mentioned below.
- Term Loans. A term loan is a lump sum loan that you’ll pay back, plus interest, over a set term.
- Short-Term Loans
- Business Lines of Credit.
- Equipment Financing.
- Invoice Financing.
- Merchant Cash Advances.
Equipment Loans: Finance New Equipment
One of the most popular asset-based loans is equipment financing. This is a potential fit if the reason you’re looking for money is to buy a piece of equipment.
Whenever you want to purchase new equipment, instead of paying for it outright, if you take an equipment loan to fund the purchase, lenders will use the actual equipment you’re buying to collateralize the loan. This increases your chances of qualifying, and potentially helps you get a better rate.
Then you pay back the loan just as you would any other loan, but now you own the equipment, which is better than, if you were leasing it.
Invoice Financing: Solve Your Sluggish Cash Flow
Another popular type of loan (that comes in many shapes and sizes) is invoice financing. With this small business loan type, you use your outstanding invoices to get a cash advance from a lender.
Invoice financing works in a lot of different ways but the most popular way is when a lender advances you a certain percent of your total invoice amount (say, 85%), and holds onto the remaining percent. Then as you’re both waiting for your customer to pay, you’re usually charged a certain percent per week outstanding (say, 1% per week). Once your customer pays, the lender will return the remaining 15%, minus their fees (1% per week and usually an additional flat processing fee, say 3%).
This is a great option if you have cash flow problems and your business simply can’t wait for a customer pay. You have rent, payroll needs… The list goes on.
This type of loan is usually best for B2B businesses.
Short-Term Loans: Quick Access to Working Capital
One of the most popular loan types found online is a short-term loan. With this loan type, you are advanced a certain amount of money that you end up paying back daily over the course of 3 to 18 months
The title pretty much says it—this is debt that is very short-term. But what the title doesn’t tell you is that it comes at a price.
Short-term loans have easy applications and looser eligibility requirements. Because of this, though, they can also get quite pricey.
They are a good loan product for the right type of business, but if you’re evaluating this type of business loan, be sure your cash flow can handle the daily payments and you truly understand the cost of the loan.
Merchant Cash Advance: Daily Credit Card Sales for Payback
The product that essentially created the online lending industry is something called a merchant cash advance.
With a merchant cash advance (or MCA), a lender basically purchases a portion of your daily credit card sales. And then you pay back the advance with; you guessed it, a percent of your daily credit sales.
The plus here is when business is slow, you pay back less, and when it booms, you pay back more. But the downside here is that an MCA is known to be the most expensive type of loan on the market.
If you’re evaluating a merchant cash advance, be certain your cash flow can handle it and that there aren’t any other types of business loans you might qualify for.
Personal Loans for Business Purposes
Another option for startup funding is using a personal loan for business. Obviously, lenders will be making this type of loan to you, the business owner, so personal credit will absolutely come into play.
SME Loan – Eligibility
- The business that is small, medium or micro enterprise should be registered in India.
- You should be an Indian resident aged between 25-66 years
- Your business should have a vintage of at least 3 years
- If it is a new start up then a detailed project report with business highlights and risk factors should serve the base for granting SME loan.
- If it is an established business in SME category then previous years financial reports will serve the base for granting SME loans.
- Self employed professionals i.e. Doctors, lawyers, chartered accountants or architects as well as self employed non-professionals i.e. sole proprietors, shop owners etc both are eligible for loans under this category.