Businesses need a regular funds flow for managing their varied financial requirements. Most of the expenses can be met from revenues but there are times when a larger expenditure needs to be incurred for future betterment of the company. Business loans are meant for such situations. Business owners, whether they are entrepreneurs or established businessmen, look at these loans when they want to expand their organisation. In fact, it can be said that business loans are a necessity for any enterprise to grow and succeed.
However, applying for a business loan and getting it approved are two different things. Banks offer loans to both small and large enterprises but they only provide money to borrowers who have the capacity to repay the loan in full and within the agreed time limit. They follow certain guidelines as a basis for their final decision. To understand these guidelines, let us look at what is called the 6 Cs of business loans.
- C for Conditions:
- C for Capacity:
- C for Collateral:
- C for Cash Flow: