Introduction:
Are you someone who is a part of a Start-up? Are you confused about how you can get funding for the same? Well in this particular condition the loan facility turned out to be the best one to consider. But the major concern among entrepreneurs becoming part of start-ups is whether they should go for long-term business loans or short term ones.
Well, this doubt is very common, and when you come to us at KEEV FINANCE, we will guide you throughout the same. But there are people who want to be sure which one they can choose and want to burst the bubble of confusion. Don’t worry because this article will clarify all your doubts. Just keep on reading till the end!
Long term loans:
Long-term business loans are the type of credit that is specially designed for a duration of 3 years or more. In some cases, that duration can get extended up to 12 to 15 years, and the borrows will have a large amount available with them to manage the expenses. These are helpful in managing the major purchases of the business, and these come up within an extended period of time, and accordingly, the finances will be managed. Along with it, the amount that individual needs to pay for repayment monthly will be less, and it will also be helpful in managing other finances of the business.
Short-term loans:
Short-term loans are different from long-term loans. These usually come up with a duration of up to 3 years. In some cases, the loan is only available for 12 months. The major reason start-ups like to have short-term loans is because this lets them be sure about the tenure for which they need to manage things on their own. In this particular duration, they will be able to analyze whether things are working the right way or not. Along with it, the amount that will be sanctioned to start up will be smaller than the long-term loans, and the interest rate will be higher for sure.
Difference between long-term and short-term loans:
In this section, we will help you to know about the differences between long-term business loans and short-term loans in Dubai before you get them:
Repayment period:
Repayment duration is something that signifies the time in which you need to pay the loan back. As the name suggests, long-term loans come up with an extended duration of up to 12 or 15 years but not less than three years. On the other hand, short-term loans are sanctioned for a duration of up to two or three years only. According to the amount the duration is decided. In some cases, the duration that has been sanctioned is only 12 months, and a Start-up needs to repay the same loan within this particular duration only.
Loan amount sanctioned:
In long-term loans, the loan amount that is sanctioned will be comparatively higher than short-term loans. For example, if in the short term you are getting 1000 UAE, then in the long term you can get up to 20000 or 40000 UAE. The amount that will be sanctioned to you depends on different parameters, and a loan financing company like us, KEEV FINANCE, will take care of everything and then let you know about the amount that can be sanctioned to you.
Collateral requirement:
There are so many conditions where Collateral is required. There is a possibility that when you are going for a short-term loan Dubai, no Collateral will be required. But if a long-term business loan is in consideration, there is not even a single body that can provide you with a loan without Collateral. The value of the Collateral will be so that it must cover more than 10% of the sanctioned loan amount.
Interest rate:
The amount of interest that you need to pay on both short-term and long-term loans is different. Usually, the interest rate on a short-term loan is lower than a long-term one. But do understand it also very according to the credit score and the Lander and the type of loan you are taking. The amount that you need to pay for personal loan interest is quite higher than the amount you need to pay for a home loan or some other property kind of loan.
Conclusion:
In conclusion, this was all about short-term and long-term loans. When you go for a long-term business loan, you need to be sure that this one is a great responsibility, and you need to be ready for those conditions as well when there is no runway available in your account. The same is applicable to the short-term loan Dubai facility you are availing. Don’t worry; when you come to us at KEEV FINANCE, we will guide you at every step. We will clarify all your doubts regarding the same so that there will be no confusion at all and you can get the advantages. Our executives will not only help you to get the amount available but will also help you to understand the conditions that you need to get ready for after having the loan. Don’t worry; the process of seamless, and you will not face any problems for sure!