What are the types of short term loans?
There are various loans that you can take and payback in a year’s time. They range from Personal Loans to loans for business.
Personal Loans: These are loans that can be taken by salaried and self-employed individuals and can be to the tune of Rs.30 lakhs, depending on the bank or company you approach for the loan. These loans can be paid back in a period that ranges from 6 months to 5 years, and typically comes with interest rates that are higher than other loans. The advantage of these loans is that there are no restrictions on what you use the money for and are generally issued quickly, in a period of 48 to 72 hours, and require minimal documentation.
SME short term loans: These are loans that are extended by banks to companies that need to take loans to meet their immediate requirement for funds. There are certain eligibility criteria that are defined by the banks which companies must meet in order to avail this loan. For example if you were to go in for this loan from Bank of Baroda the eligibility criteria would be as follows.
The company would be required to have a minimum annual turnover of at least Rs.150 crores. The composite limit for the BOB SME short-term loan is Rs.5 crores or 4.5 times of tangible net worth of the borrower according to the last balance sheet, whichever is lower. The margin for this loan product is 25%. If you choose an SME short-term loan from DHFL, you will get financial assistance for purchasing machinery, property, machinery, plant, medical equipment, etc.
Bridge loans: These are loans that can be taken to tide you over till you can get another loan. These loans are associated with transactions related to the buying and selling of property. How it works is that if you want to buy a new house, have found the perfect one but don’t have the funds to purchase it because the old house hasn’t been sold yet, you can go in for a bridge loan that will let you buy the new house while you wait for the old one to be sold. These loans can also be taken by companies against expected returns or even while a company waits for their funding to come through.
Demand loans: These are loans that can be provided by banks or NBFCs to meet any urgent financial demands that you may have. They can be secured loans wherein you provide savings instruments or assets to take the loan. The amount that you can borrow will be determined by the maturity value of your savings and will be a certain percentage of said maturity value. The loan could range from 70% to 90% of the surrender or maturity value of the savings instrument.
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