Here are some frequently asked questions about business loans:

How does a Poor Credit History affect entitlement for a business loan?

It might not be difficult to get a business loan, if there are occasional defaults in the repayments of earlier loans. However, in case of CJJs or bankruptcy, it would be difficult to get a loan. If a loan is available, then you would be expected to put up some extra security, and the interest rate would be higher.

What is the general time period for repayment of business loan?

The time period for repaying a business loan is generally between one and fifteen years. The term also depends upon the amount of the business loan, but the sooner the loan amount is repaid, the more you will save on interest payments.

For what purpose can the business loan be utilized?

The business loan can be used for expanding the business, purchasing assets such as plant and machinery, rearranging debt, or equipment refinancing.

Can the business loan be repaid earlier than the stipulated time?

Normally business loans are repayable within fifteen years; however, if the amount is proposed to be repaid within five years, then it can be done if agreed by the lender after charging you a redemption fee. If the business loan is repaid after five years, then no redemption charges are payable.

Why do I need a business loan when I can arrange an overdraft?

By taking a business loan, cash flow and liquidity is maintained. However, by taking out an overdraft or using cash, other credit facilities may become restricted. This may cause problems in arranging cash for any short term unforeseen expenses.

If the business loan is used to purchase assets, then who becomes the owner?

The business owner becomes the owner of all assets including plant and machinery that is purchased with the business loan. In this case, the assets are pledged as collateral security of the business secured loan. Therefore, the entire asset may be under threat in case of a default in the loan repayments.

What can a businessman do to secure the confidence of the lender?

The best way to secure the confidence of the lender is to invest a certain amount of the loan into the business. The lender will be convinced about the confidence of the entrepreneur and will not hesitate to give the loan.

Who is responsible for repayment of a business loan?

If you are a Public Limited Company or Private Limited Company, then the directors are liable for paying back the loan amount. In the case of Partnership firms, all partners or any partners as agreed upon are liable. If there are proprietorship concerns, then the owner has to repay the loan amount.

All queries regarding business loans, payday loans and the best places to get them are available on the internet. A careful and thorough research of the loans available will reveal the facts and figures associated with borrowing, including any additional financial advice available from the lender to support your decision-making so that you can secure a business loan at low interest. Advice will be available on the ways of utilizing the loan for the purpose of generating profit.