What is a Business Loan?
A business loan is a debt-based funding arrangement between a business and a financial institution (e.g. bank) specifically intended for business purposes. Simply put, it is a loan solely to companies and businesses. Similar to a personal loan, the repayment of a business loan includes interest payments on the loan amount.
What are business loans used for?
It is typically used as working capital to fund operating costs and capital expenditures.
What are some examples of business loans?
Some examples include business term loans, microloans, mezzanine financing, asset-based financing (commercial property loan, equipment loan), invoice financing, senior debt. This article will focus on business term loan.
Related: Business Term Loans in Singapore
About business term loans
A business term loan may be obtained from a financial institution (e.g. bank) and may be either secured or unsecured. The financial institution will assess the business’ accounts, balance sheet and business plans (sometimes), as well as the borrower’s credit history.
In the recent years, there is an increase in borrowing from alternative financiers by businesses, especially smaller and younger businesses, as most banks usually lend to businesses that have been longer in operation.
Contact us if you would like consultation on borrowing from alternative financiers.
What can I expect in a business term loan?
Business term loans are usually structured by: loan amount, loan tenure (period), interest rate, security, covenants, terms. The borrower is expected to make timely monthly repayments (principal and interest) towards the loan. If the repayments are not prompt, late fees and additional interest expenses will be levied on the borrower.
How can I apply for a business term loan?
Contact us today for a free loan advisory to get started.