What is a Business Loan?

A business loan is a loan specifically intended for business purposes1. Businesses need loans to cover various expenses, such as starting up, expanding, buying equipment, etc. There are different types of business loans available in India.

Working capital loan

A loan to fund the daily operations of a business, such as paying salaries, rent, inventory, etc.

Term loan

A loan that is repaid in regular installments over a fixed period of time, usually ranging from one to five years or more.

Equipment financing loan

A loan to purchase or upgrade the machinery and equipment needed for the business.

Letter of credit

A credit limit that guarantees the payment of a business that deals in international trade, especially with unknown suppliers or customers.

Invoice financing loan

A loan based on the pending invoices or receivables of a business, which can be used until the customers pay.

Government scheme loan

A loan that is offered by the government or its agencies to support specific sectors or segments of businesses, such as MSMEs, women entrepreneurs, startups, etc.