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Banks grant business loans for different periods- short-, medium- and long-term. Short-term loans are granted to meet the working capital needs of the businessman. These loans are granted against the security of tangible assets - mainly the movable assets like goods and commodities, shares, and debentures. Medium and long-term loans in no credit check business loans are usually called term loans.
These loans are granted for more than a year, and are meant for purchase of capital assets for the establishment of new units and for expansion or diversification of existing units. Banks and financial institutions usually grant such loans together. Such loans constitute a part of the project finance, which industrial enterprises are required to raise from different sources. These loans are usually secured by the tangible assets like land, buildings, plants and machinery.
To avoid excessive concentration of credit among a few borrowers and to keep the risk potential within limits, financial institutions follow credit exposure norms set by management at top levels. Exposure norms mean the ceiling limits within which a bank may grant loans and advances, and non-fund based facilities to a single borrower or a group of borrowers.
When a loan is granted both for buying capital assets and for working capital purposes, it is called a composite loan. Such loans are usually granted to small borrowers, such as small industries. Though normally banks provide loans for productive purposes only, loans are also granted on a limited scale to meet the medical needs or other expenses needed by a business enterprise for his employee. Such loans are called consumption loans. In no credit check business loans, credit is given for a definite purpose and for a predetermined period. Normally, these loans are repayable in installments.