5 Smart Reasons to Get a Business Loan

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“Got a Great Business Idea. Don’t Have Enough Money”

You’re not alone !!!

It is evident fact, that most businesses can perform better with additional funds.

Business owner(s) must ask below questions before arranging finance for new venture or expansion.

  1. 1. How much money do I need?
  2. 2. What is the tenure of the loan?
  3. 3. How quickly I require those funds?
  4. 4. Who is offering best loan offer & repayment terms in the market?

Business Loan

A Business Loan is a loan taken exclusively for business purposes such as business expansion, purchase additional inventories, procuring new equipment or technology, cover daily working capital needs etc.

The business loan interest rate ranges from 9% to 20% depending on the requirements and resources of the borrower(s). Each lender has different criteria for sanctioning a business loan. The most critical factors are – nature of the business, credit score, audited financials, past & future cash flow, business vintage etc.

Types of Business Loan

  1. 1. Term Loan
  2. 2. Invoice Financing
  3. 3. Mezzanine Financing
  4. 4. Working Capital Loan
  5. 5. Equipment Financing
  6. 6. Business Credit Cards
  7. 7. Unsecured Business Loan

5 Smart Reasons to Get a Business Loan

Here is the list of top 5 benefits of availing a business loan:

  1. 1. Advertising & Promotions: The businessman who stops investing in advertising activities to save money is like a person who stops the clock to save time. The Advertising and marketing promotions are pretty much important tools to build brand awareness and drive sales.
  2. 2. Hire New Talent: Sometimes you need specialists in the specific areas to grow your business. With the flexible business loan, you can even recruit fresh talent from abroad.
  3. 3. Procure More Inventories: It is critical to meet the demand of the market you need to have adequate inventories. For the same reason, you can avail a working capital loan.
  4. 4. Business Expansion: To sustain in any business segment, you need to consistently increase your physical reach. The term loans help business without eating operational funds.
  5. 5. Upgrade Equipment & Technology: Technology is always changing. To get an edge over your competitors, you should forget to invest in purchasing new equipment & technology.

Benefits of Availing a Business Loan

Here is the list of top 5 benefits of availing a business loan:

  1. 1. Flexible Repayment Options: As per business & payment cycle of the business, owner(s) can choose repayment options. If they have good repayment track record, then even lender will modify EMI & Tenure to support borrowers.
  2. 2. Varieties of Loan: Depending upon the requirement of the business, owner(s) can select the type of business loan. (List is given in above section).
  3. 3. Easy Availability: In India, there are schemes like CGTMSE, where a business can avail collateral free loan up to Rs 2 Crores. With the emergence of Fintech companies like CapitaWorld (ISO certified Online Lending platform), the process of availing business loan has become much easier.

Conclusion

Business loans are a great way to provide the required financial boost to your business but before applying for a business loan a business owner must analyse various details such as factoring of various costs and cash flows as well as repayment capability among others.

A business owner should also compare processing fee, EMIs, prepayment options and foreclosure charges of fund providers. Knowing all the terms and conditions prior to signing the loan agreement will prevent you from shocks & surprises in the future.

We hope that this article will help all borrowers, who are planning to take a business loan to fund a new venture or business expansion. If you have any query related to MSME loan or business loan, then please feel free to contact us.


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