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Types Of Business And Their Loan Requirement

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By Author: Finway Capital
Total Articles: 89
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The nature of the business determines the goals and the funding required. The bigger the goals are, the larger the sum of money will be needed. So if you are in Delhi and wish to expand the business in other parts of the country, you will still access Business Loan in Delhi only as it is here that you operate. Other than the location, Loan Against Property is also an option for secured loans where you need to submit a collateral. Let us elaborately understand the types of loans required for various businesses:

1. Sole Proprietorship: As the name indicates, this is a solely owned business. In this type of business, a secured loan or an unsecured loan is possible. However, all that depends upon your personal credit score. You will be surprised how a personal credit score remains vital even though it is Business Loan. In this case, since you are a Sole Proprietor of the business, the creditworthiness of the business is dependent on your personal credit score.

2. Partnership Firms: When a sole proprietorship is expanded and divided into two firms, such an agreement is called a Partnership firm. Even in this case, the loan can be secured or unsecured, but the credit history and worthiness of the partners will be scrutinized by the lenders. Only when the credit history of both the partners is proved appropriate and within the prescribed limit, a Business Loan in Delhi or if you are operating in Mumbai will be sanctioned.

3. Public Limited Companies: Such companies are usually if a large scale and have shares floating in the share market. Such companies garner finances by selling their shares. They also apply for Loan Against Property; however, that is usually for personal reasons and only founders do that. The founder's actions do not affect the firm in any way and the company can enjoy the status quo.

4. Private Limited Companies: Private limited companies are those who own more than 50% of the shares of their company. Only some part of the shares is sold to the public for collecting funds and for gaining a position in the share market. A private limited company does not get affected by the owner's behavior of buying and purchasing property or shares. The company thus enjoys its independent status. So if you are the owner of a private limited company, your credit score will not affect the company.

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