Small Business Start Up Loans

 


Visitors: 296

Small business startup loans are usually given in the form of term loans. Term loans, also referred to as term finance, represent a source of debt finance which is generally repayable in more than one year but less than 10 years. They are employed to finance acquisition of fixed assets and working capital margins. Term loans differ from short-term bank loans, which are employed to finance short-term working capital needs and tend to be self-liquidating over a period of time, usually less than one year.

Term loans typically represent secured borrowing. Usually assets, which are financed with the proceeds of the term loan, provide the prime security. Other assets of the firm may serve as collateral security. All loans provided by financial institutions, along with interest, liquidated damages, commitment charges, and expenses, are secured by the way of equitable mortgage of all immovable properties of the borrower, both present and future. This is followed by hypothecation of all movable properties of the borrower, both present and future, subject to prior charges in favor of commercial banks for obtaining working capital advance in the normal course of business.

The interest on term loans is a statutory obligation that is payable irrespective of the financial situation of the firm. To the general category of borrowers, financial institutions presently charge an interest rate of around 10-14 per cent. Of late, financial institutions are imposing a penalty for defaults. In face of default of payment of installments of principal and/or interest, the borrower is liable to pay by way of liquidated damages additional interest calculated at the rate of 1-2 percent per annum for the period of default on the amount of principal and/or interest in default. Typically, term loans provided by financial institutions are repayable in equal semi-annual installments. It may be noted that the interest burden declines over time, whereas the principal repayment remains constant.

Small Business Loans provides detailed information on How To Get A Small Business Loans, Minority Small Business Loans, Small Business Bad Credit Loans, Small Business Government Loans and more. Small Business Loans is affiliated with UK Home Loans .

(360)
Tags:

Article Source:


 
Rate this Article: 
 
Small Business Loans - A Feasible Loan Scheme For Small Business Owners
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Small Start Up Business Loans - Financial Backbone of Every New Business Venture

by: Barry Jone (June 27, 2008) 
(Finance/Loans)

Small Business Start Up Loans - What to Expect

by: Gressly Stevens (September 22, 2008) 
(Finance/Commercial Loans)

Small Business Loans Initiates a Good Start For Your Business

by: Ben Gannon (June 17, 2008) 
(Finance/Commercial Loans)

Unsecured Small Business Loans Can Jump Start Your Business

by: Marilyn Katz (January 09, 2008) 
(Finance/Loans)

Small Business Loans - Start Your Business With Your Money

by: Ben Gannon (August 29, 2008) 
(Finance/Commercial Loans)

For A Fresh and Auspicious Start- Small Business Startup Loans

by: Tim Kelly (September 23, 2006) 
(Finance)

Small Business Start Up Loans Increase the Chances Youll Be Approved With These .

by: Robert L Wilson (August 13, 2008) 
(Finance/Commercial Loans)

Small Business Tips- Free Helpful Article For Small Business Start Up

by: Pallavi Bawane (May 21, 2010) 
(Business/Small Business)

How to Start a Small Business - 5 Tips to Starting a Successful Small Business

by: Vern How Chan (June 30, 2008) 
(Internet and Businesses Online/Internet Marketing)

Small Business Loans - A Feasible Loan Scheme For Small Business Owners

by: Andy Burton (July 02, 2008) 
(Finance/Loans)