Capital flow is a constant requirement for every business. The ups and downs of funds are inevitable and so, borrowing a term loan is commonplace for businesses. Be it for the daily expenses, purchasing a new machine or salary payment, a business term loan can assist you with the instant fund needs. Read on as we take you through one of the best business term loan options, LendingKart business loans. Read on to know all about it.

What is a Business Term Loan?

Term loan, as the name may suggest, is for a specific tenure, usually for a short-term loan. Seeking a loan for business is termed a business term loan. The borrower must have a regular and specified source of income and the capability of repaying the loan EMI regularly. With LendingKart, you may find your ideal short-term business loan.

Types of Term Loan

Working capital term loans can be classified based on the tenure and the security held against it. Based on tenure, a term loan is divided as:

Short term loans

A term loan that has a repayment tenure of 5 years or less is categorized as a short term loan

Long term loans

A long term loan has a repayment tenure of more than 5 years.

Now, based on security, term loans are divided into the following categories:

Secured loans

Secured loans are the ones that are availed against collateral/security, for instance, a fixed deposit.

Unsecured loans

Unsecured loans require no collateral/security. It is offered on the basis of the repayment capacity of the borrower considering the credit history and score. However, the interest rates of unsecured loans can be higher.

Short-term Loans versus Long-term Loans

To decide the type of working capital loan that you require, you must know the differences between short-term and long-term loans. The table below explains the differences:

Short term loans

Long term loans

Short term loans have shorter repayment tenure, usually from 1-5 years

Long-term loans continue the repayment process for over 5 years

The overall interest paid on short-term loans is substantially lower than on long-term loans

Due to longer repayment tenure, the overall interest amount is higher in long-term loans

Bad credit problems are usually not a concern with short-term loans

With long-term loans, missing out on EMIs can lead to bad credit

Short term loans do have a higher interest rate than long term. However, the overall interest amount is quite less

Long-term loans are better if you prefer a substantially lower interest rate

For small and medium enterprises, short term loans can be a good choice as they usually have short term fund requirements

Long term business loans are usually preferred by large businesses

So, depending on your repayment capacity and the fund requirement, you may choose a term plan that best suits your needs.

The Bottom Line

Small and medium enterprises require initial capital support to aid their growth and expansion. In this journey of entrepreneurship, LendingKart can be your partner. The entire loan application process is online so you can apply for it without any hassle. Short term loans online get approved instantly. The competitive interest rate and flexibility of repayment tenure make our term plans an ideal choice. Usually, you can avail of collateral-free loans. So, start your business with LendingKart to aid your journey financially.

Comprehensive Guide to Lendingkart Business Term Loans