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For a small business getting a quick business loan at lower interest rates is key to making the most of business opportunities. However, it is not an easy job to get business loan, especially when you are starting a new business. Traditional approach is contacting bank and asking for loan. But, apart from bank there are various other emerging business loan options. If you are in need of money for business you should explore following emerging business loan options.
7 Emerging Business Loan Options
Peer-To-Peer (P2P) Lending
Peer-to-peer lending or P2P lending is one of the easiest way to raise finance for the business. P2P lending platform eliminates need for a middleman by linking lenders and borrowers directly. It is a market place like Flipkart and Amazon for getting a loan. P2P gives opportunity to avail unsecured loan at suitable interest rate. However, as per RBI regulation maximum loan offered by this platform is 10 Lakh. So, if you are looking for higher loan amount this option will not work.
The second business loan option is line of credit. It is an arrangement between bank and customer that enables borrower to take money based on the maximum approved limit. Line of credit facility is extended to individual, small business, government and other organization by bank or financial institutions. Business line of credit can be unsecured or secured. This type of facility is generally used for working capital.
Online Personal Loans
Online personal loan is next alterative to business loan. Bank or NBFC provides option of availing online personal loan. It is unsecured loan and requires minimum documentation. The processing time for this type of loan is also fast. The drawbacks of this loan is higher interest rate compared to traditional business loan and limit of raising capital.
B2B lending or business to business lending is equivalent to P2P lending. Only difference is B2B is used only for business. There are various online and offline options available for B2B lending. B2B lending is like one business is helping other business. The flexibility of choosing amount, lower interest rate and mutual agreement on pre-payment are some advantages of B2B lending.
Microloans are loans that are given to small and medium enterprise and startups. It is one of the most viable business loan option. This type of loan is offered to low-income group people, women and people who have little access to formal financial services. There are many lenders that provides microloans to small business owners with small amount and lower interest rates which bank never offers.
Equipment financing is borrowing for buying an equipment required to run your business. The equipment includes anything from a computer to an industry-specific machinery, like a tractor or heavy machine. This kind of a loan is ideal for a company that is buying bulk equipment’s or involved in
Pradhan Mantri Mudra Yojana
Pradhan Mantri Mudra Yojana (PMMY) is loan scheme specially designed for the MSME and startup. PMMY is offered by commercial banks, small finance bank, cooperative bank and even by NBFC. The loan under PMMY is given in three category Shishu, Kishore and Tarun. It is based on the loan amount. Loan amount is maximum under Tarun -10 Lakh.