Business start up loans is defined as loans that would help new and eager entrepreneur to start a business. A new business is usually considered a venture which is perhaps a year old or may be lesser. Start up business loans are usually required to start a new factory, or perhaps buy a real estate property. Some of the business start up loans borrower also takes loans to establish a business in the field of retail, or a distribution network. However, multi level networking, and home based business are kept out of the financing set up. No financial set up will ever consider providing business start up loans to even pawn shops.
Types of business start up loans
There are mainly two types of start up business loans. However, theres the third one too.
Short term loans A short term loan is a kind of loan which is normally used for immediate capital needs. These short term loans are financed by financial institutions for a period of 1 year. An entrepreneur will like to use such loans for initial capital requirement after he had already established his initial business infrastructure. Short term loans are borrowed to be used as working capital.
Long term loans A long term loan can be for a period of 25 years. Such loans are provided by the lender against some kind of collateral. An entrepreneur might use these loans to invest in real estate property, and in that case the property is hypothecated against the loan. However, long term loans are usually provided to large business, rather than a small business.
Micro loans Micro loans are provided as start up business loans even without collateral. The amount is perhaps, smaller, but such loans can be had easily. Financial institutions provide Micro loans to entrepreneurs even without checking their credit score.
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