Both banks and online lenders offer this service. It allows for a revolving credit facility, in which a businessman can withdraw money from their company account up to a sanctioned amount, even if the account balance is lower. The remaining balance is treated as a business loan that can be repaid by paying the same amount, plus interest, into the account.

In lieu of capital investment, business owners might raise funds by selling their shares in the company. While equity capital is a popular choice in more mature markets such as the United States, SMEs in India like it less because it comes with the danger of ownership dilution. Once the investment objectives have been reached, a business owner can retain the option of buying back shares to return to preferred ownership levels in the case of equity funding.

Due to the shorter repayment period, these loans have a reduced ticket size. A short-term loan is typically for a period of 3 to 18 months, as these loans are intended for working capital and modest capital expenditure. Credokart, on the other hand, provides short-term business loans ranging from 1 to 24 months, making financing more accessible to small and medium businesses in India.

The use of equipment finance to improve cash flow and working capital is common. The use of a loan or lease to purchase or borrow hard assets is known as equipment finance. Because the lender has rights to the equipment in the event of a default, it is a secured business loan.

These are relatively short-term credits granted in lieu of accounts receivables, often known as invoice financing. This type of business credit has the drawback of being available exclusively to SMEs with commercial customers. The loan’s tenure usually ends on the invoice due date, and full payment, plus interest and processing fees, is required.

Under this arrangement, the money is paid in advance by the factoring company to the business for accounts receivable. However, instead of paying the full amount, a percentage of the amount, usually 70% to 90% of the invoice value, is paid. The rest is retained to cover unforeseen charges, breakage, delivery, and quality errors. For this kind of business loan, both the buying and selling companies have to come on board and work with a factoring company.

Credokart provides small and medium enterprises in India with personalized business loans. Our loans are free of the bureaucratic red tape that sometimes comes with bank loans, and the application, approval, and disbursal processes are all very straightforward. We’ve created a quick and easy-to-use digital interface that reduces human involvement and so speeds up the entire ‘getting a business loan’ procedure.