Types of Business Loans and Which One Suits Your Needs

April 3, 2023
Updated on

Finding the right sources of funding for your small business can be challenging. To meet your company's financing needs, you can choose from different types of business loans. Two of the most popular business loans are working capital loans and asset purchase loans. Each loan product has its own set of qualifications, interest rates, and terms. So whether you want to buy equipment, inventory, or simply need working capital, there is a small business loan that will meet your requirements.

The best place to begin is by determining how you intend to use the loan. If your goal for the money is unclear, it's safe to say you have some work to do before approaching a lender. First, make a solid plan, and then figure out how much money you'll need to make it happen. Also, consider how long you want to have to pay back the money.

Types of Business Loans

There are several categories of business loans designed to address a variety of requirements that business owners have. Let us learn more about the two main types of business loans available in the market.

What is a Working Capital Loan?

It is classified as a small business loan and is used to fund the day-to-day operations of a company. Manufacturers, traders, wholesalers, service providers, and retailers typically avail of working capital loans. Working capital refers to the funds used to run a business on a day-to-day basis. A company may be unable to function efficiently if it does not have a free flow of working capital. To prevent this from happening to your business, you can choose a working capital loan to ensure your company's smooth operational performance.

Ways in which you can use a working capital loan:

  • Purchase raw materials/inventory
  • Payment for overhead costs like rent, salaries, electricity, etc.
  • Maintain cash flow
  • Pay for suppliers in advance
  • Cover up delayed payments

Grow your MSME with collateral-free business loans

What is an Asset Purchase Loan?

Growing your small business and increasing sales frequently necessitates acquiring assets such as new machinery . While you may have enough cash to cover your company's working capital expenses, you may be looking for a small business loan to cover the purchase of new assets to allow your business to grow. An asset purchase loan, also known as a machinery loan, funds equipment purchases for a company's manufacturing unit. 

Let’s say you own a manufacturing company that needs to purchase more machinery due to increased demand. You need the equipment quickly to meet this new demand, but it would cost you a fortune, which your small business cannot afford. Here, an asset purchase loan comes to your rescue.

Explore Types of Business Loans with Kinara Capital

As a small business owner, you can avail of different types of business loans from us. Be it a working capital loan or asset purchase loan, you can get fast and flexible financing options at Kinara Capital. If you are new to formal credit, don’t worry Kinara loan officers will assist and guide you through the process. 

To get started, all you need to do is fill out 1-minute eligibility check. After that you can take the application forward by entering details and uploading your documents to our secure online portal. Alternatively, you can choose to have our representative get in touch with you and help you with the rest of the process.

We have a quick and easy three-step process:

  • Quick 1-minute eligibility test 
  • Secure KYC and income verification
  • Quick loan disbursement

Our customers Vaishnavi and Karthik Babu of GainUp Designs bought an imported machine that helped them get new buyers and exporters. They said that Kinara Capital's unbiased support towards small businesses eased the cash flow issues and helped expand their business within the next year. Starting with one machine and three workers, they now have five machines and 45 workers. 

So, what's holding you back from growing your small business? Get in touch with Kinara Capital today!

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