Types of Business Loans Small business loans allow borrowers to use funds to grow their business and mak

e profits. It can be used to meet start up costs, expand business and for capita l investments. Business loans are needed to start a company, run an enterprise a nd purchase a new one. Banks provide this type of loans but they have strict nor ms. Then there are also other form of lenders and angel investors that provide b usiness loans. The main categories of Business loans are as under: Unsecured Business Loans: In this type of loan no collateral is offered as secur ity and loans are granted based on one s credit history and capability to make rep ayments in time. It may be difficult to get an unsecured loan but then impressiv e line of credit can also be secured. What matters is credit rating of the busin ess organization and its repayment capability. Once this gets established, finan cers do not put any restrictions on the amount granted. Secured Business Loans: In this type of loan, the borrower has to give some kind of guarantee that it is going to repay back the loan in time. This guarantee no rmally is in the form of collaterals wherein creditors receive some property doc uments from the borrower as security for the money received. This makes it possi ble for the lender to get back the amount lent out, just incase, if the borrower defaults. The assets pledged are, however, returned back by the creditor whenev er the borrower makes full repayment of loans along with interest. Secured loan provides security to the creditor as they can sell the collateral to regain the amount of money that is loaned. Trade loans: Trade loans are made available to owners so as to help them start a new entrepreneurship or continue with an existing one. The amount of the loan c an range from Rs. 25000 to Rs 100 lakh and it depends upon the age of the custom er, his financial standing, repayment capacity and period within which it has to be repaid (tenure). Professional Loans: As the name goes, this form of loan is meant for self employ ed professionals like architects, doctors, interior designers, chartered account ants, etc. This type of loan is also unsecured in nature and cannot be given to units that are in manufacturing, trading or processing. This form of loan can va ry from Rs 25000 to 25 lakhs keeping into consideration applicant s age, financial standing, repayment capacity. The tenure of the loan is maximum up-to 5 yrs. Short term business loan: This form of loan is provided to people who all of a s udden run in a crisis situation and need instant cash. This form of loans have s hort repayment period and normally the borrower has to pay back within one year span. The loan amount granted is substantial but then since it is provided insta ntly so the repayment period is kept short. Intermediate Business Loans: This form of loan has a repayment period of 1 to 3 years. It is given to entrepreneurs who are in need of capital for starting a ne w business, to buy equipment, for building inventory and for increasing working capital. Long term business loans: This form of loan is meant for business organizations that are well established. It allows enterprises to increase their fixed assets for business expansion and acquisition. The loan has period of 3 to 5 years with in which it has to be returned. This form of funding can be used for start-up bu sinesses, to provide money for construction efforts, for purchasing land or buil dings, and to support long term working capital with sufficient funds. Rates of Mid term loan

New Delhi, June 18 (ANI): The Reserve Bank of India (RBI) announced its mid term credit policy review here on Monday, and against the industry expectations, kep t the short term lending rate and the Cash Reserve Ratio (CRR) unchanged at 8 an d 4.75 percent respectively. The RBI, that had last slashed policy rates in April, contended that further red uction in key rates would "exacerbate the inflationary pressures." "Our assessment of the current growth-inflation dynamic is that there are severa l factors responsible for the slowdown in activity, particularly in investment, with the role of interest rates being relatively small. Consequently, further re duction in the policy interest rate at this juncture, rather than supporting gro wth, could exacerbate inflationary pressures," the RBI said in a statement. The central bank said that the government has failed to follow the path of fisca l consolidation it had called for in its earlier policy statement. "The Reserve Bank had frontloaded the policy rate reduction in April with a cut of 50 basis points. This decision was based on the premise that the process of f iscal consolidation critical for inflation management would get under way, along with other supply-side initiatives," the RBI said, suggesting that it was linki ng monetary policy to fiscal policy discipline. The government has said that fiscal deficit will likely be at 5.1 per cent of gr oss domestic product in financial year 2013. he markets reflected the RBI's stan ce almost immediately-the benchmark Sensex at the Bombay Stock exchange (BSE) fe ll more than 100 points. The rupee fell to 55.57 against the dollar after having touched a day's high of 55.27 earlier in the day. The RBI was expected to bring down the repo rate by at least 0.25-percentage poi nt to 7.75 percent, and the Cash Reserve Ratio (CRR) by up to 1 percentage point . Earlier this year, the RBI, in a radical departure from its 20-month rate hike s pree, had reduced the CRR by 125 bps and the repo rate by 50 bps. Following the latest GDP numbers, which showed that economic expansion has hit a nine-year low at 6.5 per cent in last fiscal, there have been incessant calls f rom the government as well as economists to give growth concerns a priority over the inflation. (ANI)

home interest-rates central-banks central-bank-india RBI repo rate - Indian central bank s interest rate Charts - historic RBI interest rates Graph Indian interest rate RBI - interest rates last year Graph Indian interest rate RBI - long-term graph The current Indian interest rate RBI (base rate) is 8.000 % RBI - Reserve Bank of India The Reserve Bank of India (RBI) is the Indian central bank. The RBI s most importa nt goal is to maintain monetary stability - moderate and stable inflation - in I ndia. For an overview of current inflation in India, click here or here for curr ent inflation by country. The RBI uses monetary policy to maintain price stabili ty and an adequate flow of credit. Rates which the Indian central bank uses for

this are the bank rate, repo rate, reverse repo rate and the cash reserve ratio. Reducing inflation has been one of the most important goals for some time. Other important tasks of the Reserve Bank of India are: to maintain the population s confidence in the system, to safeguard the intere sts of those who have entrusted their money and to supply cost-effective banking systems to the population; to manage foreign currency controls: facilitating exports, imports and inter national payment traffic and developing and maintaining the trade in foreign cur rencies in India; issuing money (the rupee) and adequately ensuring a high quality money suppl y; providing loans to commercial banks in order to maintain or grow the Gross N ational Product (GNP); acting as the government s banker; acting as the banks banker. RBI Repo rate or key short term lending rate When reference is made to the Indian interest rate this often refers to the repo rate, also called the key short term lending rate. If banks are short of funds they can borrow rupees from the Reserve Bank of India (RBI) at the repo rate, th e interest rate with a 1 day maturity. If the central bank of India wants to put more money into circulation, then the RBI will lower the repo rate. The reverse repo rate is the interest rate that banks receive if they deposit money with th e central bank. This reverse repo rate is always lower than the repo rate. Incre ases or decreases in the repo and reverse repo rate have an effect on the intere st rate on banking products such as loans, mortgages and savings. This page shows the current and historic values of Indian central bank's Repo ra te. For a summary of the current interest rates of a large number of central banks p lease click here. Tables - current and historic Indian central bank interest rates RBI latest interest rate changes change date percentage april 17 2012 8.000 % october 25 2011 8.500 % september 16 2011 8.250 % july 26 2011 8.000 % june 16 2011 7.500 % may 03 2011 7.250 % march 17 2011 6.750 % january 25 2011 6.500 % november 02 2010 6.250 % september 16 2010 6.000 % Summary of other central banks interest rates central bank interest rate region percentage date FED interest rate United States 0.250 % 12-16-2008 RBA interest rate Australia 3.500 % 06-05-2012 BACEN interest rate Brazil 7.500 % 08-29-2012 BoE interest rate Great Britain 0.500 % 03-05-2009 BOC interest rate Canada 1.000 % 09-08-2010 PBC interest rate China 6.000 % 07-05-2012 ECB interest rate Europe 0.750 % 07-05-2012 BoJ interest rate Japan 0.100 % 10-05-2010 CBR interest rate Russia 8.000 % 12-23-2011 SARB interest rate South Africa 5.000 % 07-19-2012

Reasons for interest rate change Political short-term gain: Lowering interest rates can give the economy a sh ort-run boost. Under normal conditions, most economists think a cut in interest rates will only give a short term gain in economic activity that will soon be of fset by inflation. The quick boost can influence elections. Most economists advo cate independent central banks to limit the influence of politics on interest ra tes. Deferred consumption: When money is loaned the lender delays spending the mo ney on consumption goods. Since according to time preference theory people prefe r goods now to goods later, in a free market there will be a positive interest r ate. Inflationary expectations: Most economies generally exhibit inflation, meani ng a given amount of money buys fewer goods in the future than it will now. The borrower needs to compensate the lender for this. Alternative investments: The lender has a choice between using his money in different investments. If he chooses one, he forgoes the returns from all the ot hers. Different investments effectively compete for funds. Risks of investment: There is always a risk that the borrower will go bankru pt, abscond, die, or otherwise default on the loan. This means that a lender gen erally charges a risk premium to ensure that, across his investments, he is comp ensated for those that fail. Liquidity preference: People prefer to have their resources available in a f orm that can immediately be exchanged, rather than a form that takes time or mon ey to realize. Taxes: Because some of the gains from interest may be subject to taxes, the lender may insist on a higher rate to make up for this loss. India s largest bank, State Bank of India (SBI) has decided to cut interest rates on home and auto loans from 7 August. The bank has decided to cut the rates on h ome loans and auto loans by 50 basis points. So, for home loans up to Rs 30 lak h you will have to shell out an interest rate of 10.25% per annum (p.a) as compa red to the prior 10.75% p.a. While the rate on car loans is now 10.75% p.a. as c ompared to the prevailing 11.25% p.a. Medium term loan This loan is paid off in monthly instalments over two to seven years, sometimes longer. This type of loan is suitable for capital expenses. The benefits Interest is linked to prime. The amount of the loan, the interest rate and your repayment plan depend on how much collateral you have, and the value of the assets you want to buy. You can agree to a repayment plan that suits your business and cash flow We will not call for repayments faster than the terms agreed to, provided th e terms and conditions of the loan are being met