Basic Terminologies used in Lending FinTechs

The world of financial technology - Fintech revolves around a lot of facts and figures. And to be able to have a good grasp on them, you must have an acquaintance with special terms used, most commonly in the Fintech sector. Moreover, the industry gets to see some new inmates quite often being added as Fintech buzzwords, jargon, acronyms, etc.

So, let’s roll out some of them:

#1. Alternative Financing:

Well, traditional financing institutions like banks are known to most of us. And many of you may have even tried them. The word alternate adds alternative options of financial solutions available other than those offered by the banks like stocks, bonds and cash. The SME sector seems to get very little share from the traditional financing solutions. And, here comes alternative financing in the form of diverse financial products, instruments, and tools offered by Fintechs that fall outside of the traditional product stack. 

#2. A business line of credit:

It is a kind of buy now and pay later (BNPL), an alternative financing program. You can buy or borrow a certain amount for making business purchases, stocking inventories or even for other business operations. It differs from the traditional term loan mostly in the fact that you do not have to return it as a fixed monthly repayment. It offers you a circular motion of funds; you use them as and when needed up to the approved amount, repay and make the funds available again. 

The business line of credit is a revolving credit that allows you to draw funds as per your requirements and not all at once or in fixed instalments. 

#3. Business loan:

Any business may have planned or unplanned expenses. And a business loan is a financial offering to any business either in a secured or an unsecured form.

Fintechs offering private business loans give access to quick funds to support urgent unmet requirements of a business. 

#4. Equipment financing:

This is the financial capital you can get as a business loan for installing new machinery or upgrading the current one in your business setup. 

#5. Collateral-free business loan:

It’s an unsecured business loan where the Fintech organisation lends a loan to a business without any guarantee. Fintech gives you a fixed amount of business loan at a fixed rate of interest without you having to pledge for any asset or collateral. It is becoming the most popular form of business loan, especially among the SME and MSME sector for several benefits over traditional loans such as easy documentation, quick turn-around time, low-interest rates and flexible tenure. 

This was just a sneak peek into a few Fintech terminologies. You can subscribe to our newsletter to get the new updates and get accustomed to the Fintech world. Besides, you can also browse our several business loans and avail a good business line of credit.