The small business loans are generally bank loans. The people who are just commencing to establish their small business tend to approach a bank for financing purposes simply because they provide a good amount of money as loans. In general, the small business loan is also known as the term loan. The concept behind this kind of loan is just easy to understand - this loan has a well-fixed length, which means that the person who loan should return the amount in a given period of time. Also, the loan is amortized.
Amortization means that that loan should be paid by means of installments, which would encompass both the loan's principal amount together with its interest, depending on the bank. The term loan has two categories and it is very important for you to fully understand them prior to applying for any small debt consolidation Canada. The categories are Long and Short.
As is apparent, for the short term loans, the customer should be able to return the amount in just a short span of time - usually within a year or two. However, the long term loan is designed to be paid for a much longer time and they usually reach a certain maturity period for about 2-7 years. In numerous circumstances, the time of returning the amount would also run for decades.
How can you apply for the term loan? In most instances, you have to get collateral in order to achieve this. The usual amount of the loan is around $25,000 - a very reasonable amount for all small companies to start off their business venture. The average interest rate is 1%. Sounds easy to understand, right? Well, the trickiest part is the approval.
In general, the approval processes is very complicated, so you have to be well-prepared to undergo some screening processes. Being the applicant, you should be able to prove to the bank that you have a good character and competent enough to manage your company. Also, having an unremarkable credit history is a plus point. In fact, this process is just the same in any procedures in getting loans simply because banks would like to consider all similar factors.
The good news for you is that once you are eligible to get the loan after the processes of screening, the interest rate would surely be lower than any other kinds of loan. For the established small companies, it is wise to get the long-term loan. But you have to bear in mind that your bank would really demand a very clean financial statement if you apply for this loan.
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