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Business loan-a sine qua non for all entrepreneurs Caro Hills
Growing rate of unemployment all over the world has forced many to look after other avenues of making money. One such avenue is the setting up of a business. A business, however, needs huge amounts of cash flow and one way of generating that cash flow is to avail a business loan. A Business loan could be secured or unsecured. A business loan which you borrow for starting a business will usually be secured against collateral (usually the assets of the new business). The security reduces the risk for the lender, and therefore, the lender can afford to set easy terms and conditions for the business loan. The interest rate is low and the repayment term is long. Low interest rate and long repayment term brings down the monthly instalments considerably. However, the security also means that the loan will take a long time to reach the consumer. The collateral offered needs to be evaluated by the lender and it involves a lot of paper work. The processing, sanctioning and the final disbursal therefore get delayed. An unsecured business loan doesn't require collateral to be furnished but the terms and conditions of such a loan are quite strict. Interest rates are high and the repayment term is short. However, such a loan is disbursed very fast due to the lack of collateral. It is necessary to mention here that the secured or unsecured business loan is not meant for the aspiring entrepreneurs only. It can be borrowed by existing businesses as well. Both the new and the settled entrepreneur can put the business loan to a number of uses like: Purchase of land for setting up of a factory Purchase of fresh raw materials, machinery etc Paying off the past debts of the business (if the loan is borrowed for an existing business) Paying off the wages of the employees Further expansion of business Any business loan application must be preceded by a planning of the business needs and requirements. If you are going to start a new business, please don't forget to lay before the lender your plans for the business in the near future. This will make his job easier. You also need to compare the rates of the lenders before filing an application so that you don't fall into the trap of greedy lenders. Apply online now to save time and avoid paper work. The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Ask-4-Loan as a finance specialist. 
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