Types

Every company needs cash to expand or grow, or to finance a particular activity at some point of time in its life cycle. There are a number of banks or financial institutions in Australia that extend business loan on flexible terms to its customers and help them ease their cash flow crunch. Depending on your specific requirement, you can either go for a fixed or a variable repayment terms. The financial institutions offer different interest rates to different customers based on the customer profile and various other terms of loan such as repayment period, repayment frequency as well as loan amount. There are various types of business loans and choosing the most appropriate one for you business is very important that requires a thorough research.

Business loans can be broadly classified in two categories: term loan and line of credit. While term loan is given for a specific amount and period of time and is suitable for all types of businesses that are facing shortage of working capital or fund for their growth, line of credit is a more convenient type of business loan having a flexible repayment schedule. The transfer of fund is generally much faster in the latter case, most of the times with just a phone call.

Most business loans require some kind of collateral or security. However, many financial institutions extend unsecured business loans in limited amount if your company has an extremely sound business plan, though in this case the interest rate charged could be much higher than in case of a secured business loan extended against any collateral. For an unsecured loan, you have to make sure that your business does not have a bad credit history.