Business Term Loans Information

Introduction

Business term loans are cash advanced by banks and other financial institutions to businesses. It is a loan facility available to start-up companies and existing companies to boost their financial balance sheets. The money that is advanced by the bank can be used to undertake any project such as financial equipment acquisition, renovations and growing the business.

History

Business term loans are strictly advanced to businesses and do not require a detailed proposal when applying for the money. It is a fast and straightforward loan facility that is provided by banks to help businesses to finance their operational activities. It is important for businesses to know all the information about business term loans in order to have an alternative option of raising capital.

Features

The information regarding business term loans include the term period of the loans and how the repayment terms are structured. In most cases, banks provide long term and mid-term business loans. Long term loans have a term period of more than 3 years up-to twenty years depending on your business income generating capacity as well as the amount. On the other hand, intermediate business loans have a life span of one year to three years. The principal amount is paid back in monthly installments or quarterly installments. Business term loans attract a fixed interest charge which is paid in installments together with the principal amount. Also, the loan can be paid back through a balloon payment usually at the end of the term period but this will depend on the agreed terms and conditions.

The application process for business term loans is simple but the authorization of the loan is subject to stringent scrutiny on both long–term and intermediate loans. Also, a collateral security is required before the loan is approved by the bank. Other information required during the application process are a detailed account of your business disclosing the shareholding structure, business type, directors and their personal details as well as the business financial statements like the balance sheet and the income and expenditure account. All this information should be supported by relevant physical documents that will be submitted to the bank to be used during the authorization process. The application process is directly linked to dealing with a reputable bank or any financial institution the process of choosing the right bank is the starting point.

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