Business credits : credits are primarily taken for operational purposes, expanding the business and for launching a new project. Financial institutions and many lending operators offer wide options and facilities to the business community for availing business credits. There are various types of business credits, which business people can avail, to cater to their specific needs.

Term credits : These credits are primarily used for purchasing new equipments, procure inventory and for expansion of business. This type of business credits are taken for a fixed term and the repayment are on monthly basis throughout the tenure of the credits. This credits is very convenient as the repayment is spread over a fixed period and the monthly commitment is pre-fixed .As there is a fixed commitment on the part of the borrower, the debt is cleared at the end of the period as per the plan and the business also progress well without any accumulation of debt.

Short term credits : These business credits are usually availed when the requirement is only for a short period and the funds cannot be met from the existing working capital. At the time of festivals and seasons large amount of stocks are required .The fund is required only for a shorter period. At the end of the season the trader will be able to realize the amount invested, through sales and may be in a position to repay the credits amount. There is less risk involved for the lenders as they get repayment of their short-term credits within a short period. They also earn considerable amount of interest on their capital.

Equipment Finance : Business community opts for this type of business credits when there is a need to purchase new equipments for enhancing the business prosperity .The rate of return expected from introducing the new equipment may be the deciding factor for sanctioning of the credits. The equipment financing is sanctioned on the collateral security of the equipment itself. There is no need to offer any other guarantee or to produce other collateral securities. It is also very easy to avail this kind of business credit as the lenders do not insist on complicated formalities and procedures.

Line of credit : In order to manage the temporary cash flow constraints business people usually fall upon line of credit facility wherein the borrower is allowed to draw money from the pre sanctioned credits amount. Usually the line of credit is valid for one year. The credits amount actually required may be availed and the borrower is liable to pay only charges for the amount withdrawn. However this facility is to be used very prudently as there is temptation to utilize the whole amount although there is no need for the full amount.

Credit card amount : Business credits are also granted based on the expected turnover on credit card sales. This type of credits is only sanctioned to the traders who have very good track record of sales through credit cards.

Factoring : This is one type of business credits that is granted against the invoice receivables from the customers. This credit particularly caters to the short time needs. The traders cash the invoices immediately without any delay. The banks or lenders advance the cash initially and realize the amount from the customers on a later date. The bankers charge service charges for the amount advanced.

Essential documents : The borrowers have to keep ready the following essential documents so that the sanction process will be faster and easier. A) Statement of turnover for the preceding three years. B: Audited financial statements C: Detailed project plan D: Repayment schedule. E: Reliable trade references. G: Details of security offered. H: Tax returns

The business credits availed is to be utilized very prudently else it may end up with accumulation of debts without the improvement of the business. The repayment schedule is to be maintained as per the plan so that the credit rating will be excellent. The good credit rating helps to make the processing of credits easier and faster. Before taking a credits all aspects to be studied in detail so that there is no difficulty in the repayment. The existing commitment and also the current proposal together should not pose any problem for continuing the business with any resource crunch.