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Common Small Business Financing Terms

By Finserv MARKETS - Jan 22,2020
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Common Small Business Financing Terms

For a budding entrepreneur, there is no experience more gratifying than launching his or her own business. However, with the sheer amount of research and know-how that goes into realizing this goal, it can also seem quite overwhelming. During your own research, you are certain to find several new small-business loan terms and concepts.

So, to make this step towards your small business goal easier, here is a list of some of the most common and important financial terms you should know.

Basic Finance Terms

These are some of the most basic finance terms about operating a business that every entrepreneur should be familiar with:

  • Assets: As a business owner, assets refers to everything essential that is owned by your business or used by your business for operations. This ranges from real estate and finances to the smallest parts of machinery and office tools.
  • Liabilities: In terms of business, this refers to any outstanding debt, loans or obligations brought on in the course of operating the business.
  • Cost of Goods Sold, or COGS: Refers to the total cost of producing the goods or providing the services by your company. This includes all direct costs such as material as well as labour.
  • Capital Expenditure: Money spent by a business on acquiring long-term value assets. This includes land, real estate, vehicles and equipment such as laptops.
  • Bottom Line: Can refer to a number of things, such as a company’s profit, net income or earnings. It is generally used to refer to the final total figure of a balance sheet or account.
  • Markup: Essentially refers to the difference between the selling price of a good or service you provide to the customers and the cost you pay for it yourself. It is expressed as a percentage over the cost.

Important Financing and Funding Terms

When considering funding your business with a business loan, these are some of the most important finance term to keep in mind:

  • Annual Percentage Rate

Annual Percentage Rate or APR refers to the interest rate for a whole year as well as any related fees or add-on charges, with respect to a business loan or a line of credit. Keep in mind that the APR for a business loan is not the same as its interest rate. It expresses the rate of the loan as well as the costs associated with the loan for a year.

Therefore, apart from checking out the interest rate, small business owners should also determine the overall APR they will pay on a business loan. All in all, it is best to avail a cost-effective and convenient loan such as the start-up loan available on Finserv MARKETS. It provides loan amounts of up to Rs. 30 lakhs at competitive interest rates and brings along various value-added services as well. All charges on Finserv MARKETS are levied in a completely transparent and upfront manner.

  • Line of Credit

A line of credit for a business is a facility provided by a financial institution whereby the borrower can draw funds from within a preset certain amount. The borrower can draw funds when he needs, up to the maximum limit. Whatever the amount that is drawn, the borrower pays interest on it.

Like a loan, the borrower repays this amount in installments. There is no end date, and as long as the repayments are made by the business, the line of credit remains open to the borrower. However, a line of credit typically offers less than a business loan and it remains difficult to qualify for. Also read what are the benefits of business loan only at Finserv MARKETS.

  • Term loans

The most common form of funding small businesses, term loans are loans that can be repaid in regular payments over a specified period of time. These are often offered to businesses to help them raise capital or to expand their customer base and other such purposes.

A business owner could avail a term loan for the tenure of his or her choice, based on the needs of the business. A short-term loan ranges from 12 to 18 months, an intermediate term loan could be from 3 to 5 years and a long-term loan could go on for as long as 25 years. They can even come with the option of a fixed or floating interest rate.

Now that you are familiar with these basic financial terms, all that remains is to find a reliable lender to kickstart your business venture. To that end, look no further than the Bajaj Finance business loan available on Finserv MARKETS, that offers loan amounts of up to Rs. 30 lakhs payable in easy EMIs ranging from 12 to 60 months.

Check Eligibility

What’s more, the Bajaj Finance business loan at Finserv MARKETS requires no collateral, no guarantor and just minimal documentation. It is also a quick and easy method to raise capital since your business loan is approved in 3 minutes flat and disbursed within 24 hours. You can take the first step towards realizing your business goals with this multifaceted business loan.

Also check your eligbility on the new MSME Loan scheme provided by the finance minister to boost the economy

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522