If you are planning to set up a business or willing to expand the existing one, and are in need of monetary assistance, Business Loan is the go-to option. To help you cater to your various business needs, Business Loans serves as the perfect solution to suit your requirement. Take the next step in shaping up your future while we have your back. Axis Bank Business Loan is designed keeping in mind the self-employed professionals and non-professionals for private and partnership firms, to utilize the funds for setting up business.
Axis Bank offers Business loans as Secured and Unsecured loans Business loans. As the name suggests, a Secured loan can be availed by securing the assets like, land, property, or machinery. Secured loans can be availed for a longer tenure and higher amount compared to unsecured loan where the borrower does not pledge anything to avail the loan.
In order to save their funds from getting defaulted, lenders secure the loans with specific assets. The biggest advantage of the loan is a low-interest rate and longer tenure. Since the loan amount is secured with an asset, the lender will be happy to offer a lower interest rate on your loan. Typically, the loan amount will depend on the value of your collateral. Your lender will hire a market valuer to estimate the value of a property or equipment and will decide on the loan amount.
While it’s not an idea everyone is in favor of, for offering collateral for your loan, it is how you get the most affordable financing for your business. When you refuse to offer a collateral to the lenders, your business will seem riskier and you will receive an expensive loan in the end. Collateral not only makes it easier for you to get access to funds but will also ensure that you get the loan at friendly terms of repayment.
The most important thing in any loan is the timely payment of dues. If you default, you could end up losing your valued assets to the lender. The lender will not sell your asset immediately as you default but he will take the necessary steps if the default continues. If you default for one month and have a reason for the same, the lender will not sell your property. However, if there is consistent default and the lender is of the opinion that you might not be able to make the repayment on time, he could take steps to sell the property in order to recover the outstanding funds.
Below we will discuss, different types of collaterals you can pledge to avail Axis Axis Bank Business Loan or you can also check sbi business loan online.
An alternative to collateral is a personal guarantee which helps secure the loan. When you agree for a personal guarantee, you become the cosigner of the loan. This basically means that your personal assets will be put on the line and not only your business assets. In case you are unable to make timely repayment of the business loan, the lender might start with seizing your car and then your house and your bank account. You need to be very careful when you agree for a personal guarantee on a loan. It carries the risk of losing your personal assets. Lenders will only take your personal assets when you do not repay. If you are a responsible business owner who takes on an appropriate amount of loan, there is not much you need to worry about.
This is the most common form of secured loan. Collateral is something you own which can be liquidated into cash within no time. It reduces the risk of the lender and will give you better terms on the loan. If you stop making repayments, the lender will have to make up for whatever you have not paid. You can use your savings, real estate, equipment, invoices, vehicles, blanket liens and inventory as collateral.
- Savings: There are lenders who like cash secured loans since they do not need to liquidate collateral. They can get immediate access to funds in case you default. Since your savings are just for you, it is advisable to use a different asset as collateral and not put up your savings. This includes your fixed deposit, unit-linked insurance plans, non-term life insurance, government bonds, and national savings certificate.
- Property: Loan against property is a very common form of business loan. However, if you default on the loan, you could lose your house, office or a store. The value of the asset which your lender will seize is equal to the amount you did not pay. You can use an idle property or a property that is leased out, you can use any commercial or residential property for the loan. However, the property should be under your name and you should have a clear title of ownership. In case of joint owners, they will become co-applicants to the loan.
- Vehicles, equipment, invoices, and inventory: These are pretty common types of collateral for small and medium businesses. Lenders find it easy to sell these assets and get cash for the same. It helps them recover the losses and these assets are easy to sell. The loan amount will depend on the value of the collateral. Hence, you will have to consider the amount you intend to borrow and then decide on the asset you want to use for the purpose of borrowing.
- Blanket liens: This is a collateral agreement where the lender will seize any business-related asset that they can liquidate in order to make up for the default in repayments.
To help you succeed and stay ahead in life, Axis Bank offers a hassle-free loan experience to it’s costumers. With attractive interest rates and simple and easy documentation, Axis Bank has the solution to all your business-related needs. Take the first stepping stone and choose Axis Bank as your finding partner, to meet your cash flow needs.