09 Jun 2021 | 5 min read
Businesses frequently require cash for expansion, equipment purchases, and personnel hiring. These frequently necessitate big capital investments, which can have a negative impact on cash flow. While there are alternatives to term loans, such as purchase order finance, buy order financing and working capital loans, but term loans have significant advantages. Afinoz can be a great helping hand in order to get the best business loan.
Term loans are short- to medium-term lending solutions with terms ranging from one to ten years. They are often used for expansion, asset acquisition, diversification, and other purposes, and provide a substantial sum of money in one go. Because of the advantages they provide, term loans are a popular type of finance. Let's look at the benefits of a Term Loan.
Term loans have the following features:
Term loans are classified according to the length of time they are taken out. In layman's terms, the categories are —
Short-term loans are defined as term loans with a repayment period of one year or less. Short-term loans have a higher interest rate than other types of loans, including long-term loans. Many banks in industrialized economies provide payday loans, which are unsecured short-term loans with periods as short as three or four months. However, in India, this approach has failed to catch on. Certain banks, on the other hand, provide credit card and existing loan customers with the option of purchasing consumer electronics with loans with exceptionally short terms, such as 3 or 6 months.
Eligibility for a Short-Term Loan
The eligibility conditions differ from one bank to the next, as well as from different loan types. Nonetheless, there are a few broad norms that Indian banks and financial organizations should adhere to. A few of these are listed below.
Some of the examples of short-term loans are a personal loan, customer loan, bridge loan, demand loan, and others.
Long term Loans
Long-term loans are those that are paid out for a longer length of time and have a longer repayment period. In India, term loans with a three-year or longer repayment period are commonly referred to as long-term loans. Long-term loans are defined as those with a term of more than seven years. In India, the most widely accessible long-term loans have a maximum period of ten years. Home loans and mortgages, on the other hand, are among the most common long-term loans offered by banks and financial institutions. These contracts might last up to 30 years.
Eligibility for a Long-Term Loan
Factors affecting Term Loan eligibility criteria
Eligibility for a Term Loan is determined by several factors. The following factors influence your ability to obtain a term loan:
The following are some of the lenders in India that provide term loans:
Term Loans are available from IDBI Bank.
For project financing, term loans are approved. The financing will be used to open a new unit or expand an existing one. The loan can also be used to purchase the plant, machinery, or building. The interest rate is usually based on a floating rate, and it is determined by the borrower's creditworthiness, credit rating, the risk involved, loan tenure, and other pertinent criteria.
Term Loans are available from the Union Bank of India.
Union Bank of India provides term loans to help you acquire long-term capital goods or asset creation for your business. You can also swap high-interest debts with other banks or lenders. The loan can be taken out based on a Deferred Payment Guarantee. The maximum period of employment is 84 months. The loan might also be taken out in a different currency.
Term Loans are available from the United Bank of India.
Term loans are available to cover capital expenditures such as the installation of new units, the expansion of existing units, and the project's modernization.
Term Loans are available from HDFC Bank.
Term loans are available to businesses for five years to help them expand their business, finance capital expenditures, and purchase fixed assets. A short-term loan option is also available to fit the needs of the borrower. The repayments are calculated based on the borrower's financial flow.
Lastly, a term loan can be of great financial help. You can also apply for a term loan with Afinoz as we help you to get the best business loan.