Short Term Loans for the Benefit of Traders and Salaried Individuals
Short term loans are designed for individuals who need money for a limited period extending to two years at the most. These loans are usually unsecured and the interest is payable on the principal borrowed amount. Both commercial banks and private financial institutes offer these loans to businesses and salaried individuals. The significance of availing this loan type is the convenience in its processing and disbursal.
Short term loans are attractive borrowing options for individuals who are facing liquidity crisis during Corona pandemic in India. Loss of income for salary earners and reduced business opportunities for self-employed people has resulted in rising demand for borrowings from banks and other financial institutes. The features that make this lending tempting to borrowers are:
No Collaterals – Short term loans are extended without any collateral which is highly beneficial to borrowers as most of them are tiding through a liquidity crisis in these times of pandemic.
Flexible utilisation – This type of lending is designed for multipurpose reasons. It might be used for home renovation, wedding expenses, vacation, medical emergencies and so on.
Limited borrowing – Borrowings under this loan variety is restricted within an upper limit. As this is an unsecured type, banks or financial companies desist from risking too heavily. In most cases, the lending amount is restricted to rupees three lakhs.
Term – As characterized by its name, the tenure of these borrowings is also short, and is kept limited to two years. For applicants, this is convenient since loans with shorter tenures are approved faster.
Minimal documentation – The lending being unsecured, the documentation is minimal. Paperwork is limited to a couple of pages and could be completed fast and with little assistance.
Swift disbursal – Documentation being less and approval procedure being fast, these loans are disbursed swiftly. Possibilities of same day disbursal are not uncommon.
Types of Short term loans in India
Commercial lending organizations in India have categorized their short term lending for the benefit of customers.
Trade credit – Trade credit is popular among businesses. This loan type allows you to avail a credit of usually thirty days for making purchases of goods without making any additional payments. The amount of lending and repayment schedule could be negotiated depending on the credentials of the borrower.
Demand loan – This is a secured lending option. In case of higher loan amounts, you might pledge savings instruments like term deposits, India Post savings certificates or similar such instruments. Demand loans are advantageous for business transactions that are profitable.
Bridge loans – Property dealings are generally executed with the assistance of bridge loans. This is a temporary borrowing that allows property transaction till approval of a bigger loan.
Bank overdrafts – These are banking instruments available to current account holders. This instrument allows you to withdraw money from your account beyond its available balance. However, there is a limit to this withdrawal, subject to your funds generation and repayment history. Bank overdraft is a common form of lending to business houses and traders.
Short term loans with its varieties are a boon to both salaried individuals and businessmen to tide over difficult financial times as of now.
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