Business is a form of livelihood for more than half of the world’s population. The process of making money in business is done by buying and selling various kinds of products and the profit incurred out of these buy-sell transactions.
Even though this whole process seems to be easy on the surface, there are many underlying economic and financial factors that make handling a business effectively quite a daunting task. It is understood, the larger the business, the more difficult it becomes to manage them single-handedly.
Capital for Business
In continuation of the above discussion, it is evident that to start a business, an individual or group would need a certain amount of money to buy, build, or develop the initial products they wanted to deal with in their businesses. This initial amount of money needed to jumpstart the businesses are known by the term capital. Therefore, capital can be easily deemed as the foundation for any kind of business.
Multiple ways are exercised by budding businesspersons to gather sufficient capital to initiate their businesses:
- Existing money availability
- Seeking investment from investors and diving the shares of the business amongst them
- Getting a loan from a financial institution, either by pledging any asset or not
Related: How Can I Protect My Finances Against Bank Failure?
Business Loans
Of all the ways for procuring capital for business, a business loan is often considered the most effective way. The reason for this is that most novice businesspersons do not have enough money that can save up as capital. Moreover, finding and convincing investors can prove to be a formidable task to many individuals. Another factor is the ease with which one can get business loans, just by producing valid documents, which also makes them a good choice for getting capital.
Business Loans just like any other loans also has the same major categories:
- Unsecured: Loans have taken without pledging any asset
- Secured: Loans taken against some asset that is valuable in the current market
While the concept of secured and unsecured loans is quite easy to understand, business loans are further sub-categorized based on various economic and financial factors. Some of the most common types of business loans include:
- Bank Loans
- Small Business Loans
- Finances based on assets and invoices
- Mezzanine Capital Loans
- Microloans
Online Business Loans
Gone are the days when one would need to step out of their homes, gather relevant paperwork, and be physically present in the financial institution from where they would accrue the business loans. As the world is moving into the digital era at a rapid pace, business loans are not left behind as well. The internet is flooded with great online business loan options like JD Capital Finance.
The interesting part is that many such loan agencies even give out loans to businesses or individuals with bad credit history. The online business financing platforms also provide links to various loan-disbursing agencies. They even provide a comparative analysis of these agencies in terms of their interest rates, ease of credit and repaying options, the experience of applying for the loans, and many more.
If one is to look and avail a business loan online, then it could be done quite easily. A survey of some major online business loan disbursing agencies suggests availing of business loans in primarily three simple steps:
Contact
This step involves contacting the relevant online agencies via different ways like emails, messages, calls, etc. This step also involves counseling from experts to decide on the loan best suited to your needs.
Apply
The next step is the application of the loan to the agency on the institution, which is usually filling out a form with the relevant details.
Upload
The final step is the document production, which is generally a soft copy thereby saving the hassle of handling multiple paper works.
While the main function is usually done via the above three steps, the agencies often differ in their technical details for disbursing the business loans.
Business Loans in the light of the Pandemic
With the current pandemic situation, the loan-disbursing agencies have special schemes of loans in light of the corona virus-induced lockdown that has wreaked havoc, especially on small businesses. Such schemes have special provisions in reviving small businesses that are particularly affected because of a pandemic.
The focal point of such schemes is that they are often backed by respective governments to revive the troubled businesses and in turn the economy of the country. One such prime example is the CIBILS, short for Coronavirus Business Interruption Loan Scheme, which is a government-supported package for supporting those businesses that are devastated because of this pandemic situation.
Almost the entire fabric of loan disbursing institutions in the UK, whether online or not, includes CIBILS in their offers for the ailing businesses. Even if a business does not measure up to the mark for CIBILS eligibility, they still can access the scheme.
The scheme does not impose conditions based on insufficient security. The measure has opened up the range of CIBILS largely for various businesses. It is a welcome step in aiding the failing economy in the time of such a pandemic.
Are Business Loans meant only for starting a new business?
The above question can be easily answered with a simple no. It is because business loans are meant not only for gathering capital to start new businesses, but also to enhance or revive existing businesses. In other words, business loans are like the day-to-day needs of many businesspersons, whether novice or seasoned.
The various areas where a business loan works wonders for existing businesses include:
- Improving the regular cash flow in case of any unforeseen incidents
- Refinancing the business in the face of any losses incurred
- The regular working capital can be substantially increased
- Adding new assets to the existing ones
While business loans seem to be a great way in enhancing existing businesses, one thing should be always kept in mind. A proper plan of repayment of the loan must be in place before the loan is availed. Otherwise, in case of repayment failure, the business owner would face dire consequences that might even lead to delinquency.
