1.Purpose: Business loans are intended to provide capital to businesses for a wide range of purposes, including starting a new business, expanding an existing business, purchasing equipment or inventory, covering operational expenses, investing in marketing or advertising campaigns, or funding research and development.
2.Eligibility Criteria: Lenders typically have specific eligibility criteria that businesses must meet to qualify for a loan. These criteria may include factors such as the business's creditworthiness, revenue and profitability history, time in operation, industry type, collateral availability, and the personal credit history of the business owners.
3.Loan Amount: The loan amount available to a business can vary depending on its needs, financial stability, and the lender's policies. Small businesses may be eligible for smaller loans, while larger, more established businesses may be able to secure larger loan amounts.
4.Interest Rate: Business loans generally come with an interest rate, which is the cost of borrowing the funds. The interest rate can be fixed (remains the same throughout the loan term) or variable (fluctuates based on a 5.benchmark interest rate). The rate charged by the lender depends on factors such as the business's creditworthiness, the loan amount, the loan term, and market conditions.
6.Repayment Term: The repayment term refers to the period over which the loan must be repaid. Business loans can have short-term repayment periods (usually less than a year), medium-term periods (one to five years), or long-term periods (five to 25 years). The repayment schedule may involve monthly, quarterly, or annual payments, depending on the loan agreement.