Difference between an SME Installment Loan (Amortization Loan) and an SME Short-Term Loan (Bullet Loan)

1. SME Installment Loan (Amortization Loan):

   • Repayment: This loan is repaid in fixed monthly installments. Each installment includes a portion for amortization and interest, gradually reducing the outstanding balance and lowering interest costs over time.
   • Advantage: The even distribution of repayments over the entire loan term allows companies to reliably plan their monthly payments.
   • Best suited for: Companies that prefer regular monthly repayments and have stable cash flow.
     
     

2. SME Short-Term Loan (Bullet Loan):

   • Repayment: With this type of loan, there are no monthly payments for interest or amortization during the loan term. The entire loan amount, including interest, is repaid in a single payment at the end of the term.
   • Advantage: No monthly payment burden during the loan term, which helps to preserve the company's liquidity.
   • Best suited for: Companies expecting larger revenues at a later stage and preferring to repay the entire loan in one single payment.

In summary, the SME Installment Loan enables reliable monthly repayments, while the SME Short-Term Loan, with its bullet repayment at the end, offers liquidity flexibility, making it ideal for companies expecting future income.