In today's era, there has been a boom in stock trading or trading in the equity markets. In light of this, Business Loan for stock traders has become more prevalent.
The primary goal of stock market traders is to maximise earnings by profiting from market price fluctuations on individual stocks. They may purchase or sell shares for short-term trades lasting just seconds or for longer-term trades with a holding period of several weeks. And to maintain these price fluctuations, they sometimes require a huge amount of money which nowadays can be easily covered up by Business Loans for stock trading.
You have many other options outside the conventional term loan when it comes to obtaining money for your business. Depending on your business and what you need the funds for, you might want to consider a line of credit, merchant cash advance or other types of Business Loan. Today there are several alternatives in the economy that provide Business Loans for traders in a smart way. From term loans to lines of credit to short-term funding, you have many options for Business Loans. What's best for you will depend on the kind of business you run and what it needs funding for.
For instance, business term loans are typically unsecured and ideal for covering a one-time expense. Similarly, there are various Business Loans for stock trading provided at a flexible tenure, easy application and even collateral-free loans.
Usually, these traders are engaged in several activities which involve a large flow of capital to successfully run their businesses. A stock trader oversees financial dealings in several equities while keeping an eye on the market. They may require work as managers dealing with mutual funds, hedge funds, pension funds or even investment funds. And so, some typical tasks are necessary to be performed by a trader which are:
All these tasks can be easily covered by a Business Loan for traders provided by several organizations at a flexible interest rate and lower EMI. After all, contrary to what most people believe, traders have a very important role to play in markets. In fact, without traders, markets would not be as strong and liquidity-rich as they are today.
Here are a few types of Business Loan for traders that are in the market along with their pros and cons:
1. Business term loan: A term loan is a loan that is required to be repaid in regular payments over a set period. Term loans are broadly categorized into short-term and long-term loans, where repayment terms range from 12 months to 5 years. Term loans that are of a shorter duration i.e. 12 months are called short-term loans and loans up to 10 years are called long-term loans.
- Can be used for any business purposes
- Repayments are predictable
- You can borrow larger amounts and get them approved within a few days
- Many term loans carry early repayment charges
- For poor credit ratings you may require to provide collateral or have a ‘blanket lien’ placed on your enterprise
2. Letter of credit: It is a type of credit limit used majorly in trading businesses in which the bank or lender provides funding guarantees to enterprises that deal in international trade. Entrepreneurs can use letters of credit for both import and export transactions.
- Flexible funding
- Available for emergencies
- Lower APR rates and high maximum borrowing amounts
- Suitable for businesses with less than perfect credit
- High penalties for missed payments
- May need to provide collateral
3. Merchant cash advances (MCAs): MCAs are another way to access financing based on the promise of future revenue. When you apply for this funding option, a merchant services company may examine your daily credit card sales and the loan amount you request. This is done so that they can decide how much money it feels comfortable spending to advance their venture.
- High credit card volume access cash fast.
- You might even qualify with bad credit.
- Factor rates tend to be higher than the interest rates and might create future cash flow problems.
Also Read :- Top 6 Mistakes To Avoid While Taking A Business Loan
To get a Business Loan for traders following are some basic steps that an applicant must adhere to get his/her loan sanctioned:
1. Business loan eligibility criteria
Age: Applicants must be between 22 and 62 years of age.
Work experience: Applicants must have a business vintage of at least 3 years
Annual turnover: The applicant’s business must have a minimum annual turnover of ?20 lakh.
2. Documents required
KYC: Company PAN Card, Director/Proprietor/ Partner PAN Card, Aadhaar Card, Passport. Proprietor/Partner/Director PAN Card, Aadhaar Card, Electricity Bill/Rent Agreement/Passport.
Financial Documents: Bank account statement for the past 6 months.
Business Proof: Utility bills/ Rent Agreement / Partnership deed agreement
Traders are agnostic in their trading methods since they are looking for short- to medium-term profits in the market. So, to get a Business Loan for stock trading, you should dig deep into some of the crucial facts to avoid any sort of snag. You should be very clear about what you hope to achieve with the loan and how much money you will require to do so. It will be simpler to explain your needs to lenders if you can convey them clearly both in writing and in person.
Qualifying for a Business Loan for stock trading means successfully demonstrating your repayment capability. For this, maintaining a healthy credit score is very important. We at Poonawalla Fincorp are aware of such requirements and provide the Business Loan as an effective option for all business owners looking to stay competitive.
Micro, small, and medium enterprises (MSMEs) are among the largest employment providers in India. The total contribution of MSMEs to the overall employment in the country is 69%.
A small business incurs many expenses, from stocking inventory, and repairing machinery, to managing payroll for daily working capital needs. As small business owners, they have limited cash flow and capital.
Most small and medium-sized businesses need to raise funds from time to time to take the company to the next level. These businesses have always been the backbone of the economy.
Micro, small, and medium enterprises (MSMEs) are the growth drivers of the Indian economy. To sustain their growth, the Government of India provides several subsidies and schemes to them.
Getting a business loan is easy and opens many options for growth and expansion. While getting a Business Loan is relatively easy, provided you choose the right lender, using the proceeds of the Business Loan correctly is a challenging task.