Owners of a small or medium-sized enterprise (SME) know of the varied challenges they face on a daily basis. There are various hurdles that block their way, such as – building the perfect product, marketing it at the right time, financing employees, paying for rental products and so much more.
How do business loans help?
Small business loan is the perfect solution to meet not only your day-to-day financial obligations, but also to support your growing business needs.
There are various types of loans SMEs can avail:
- Working Capital Loan: In the range of 6-12 months, these business loans are the best solution if you are looking to overcome short term cash shortages that can impact day-to-day functioning.
- Term Loans: These standard loans can have a tenure ranging from 5-20 years and attractive options around interest rates. These loans are applied for a specific purpose and can require you to put up some kind of a collateral.
- Equipment financing: Typically used by manufacturing businesses, these loans are used to purchase expensive equipment and lenders may need to keep the equipment as a collateral.
Benefits of Business Loans
When you apply for a business loan, your business benefits from its many tangible and intangible perks:
- Easing of cash flow: Business loans will help you to boost revenues and gain an edge over your competition. This can be especially useful if you are:
- Expanding your business
- Opening a new office
- Launching a new product or marketing campaign
- Looking to overcome temporary cash shortage due to seasonality of product, and more.
- Convenient repayment options: Financial institutions will work with your SME to determine the best repayment options on your loan.
- This can be designed around when your cash flow is at its maximum to avoid financial challenges during off-peak months.
- Banks also provide you with the alternative of increasing and decreasing your installments based on your company’s performance.
- Affordable interest rates and charges: Business loans have certain myths surrounding them, and many business owners wrongfully assume that costs of these loans are exorbitant. In reality:
- Interest rates are actually dependent on the tenure of your loan and on other factors like your credit worthiness and your company’s financial stability.
- Those looking for reduced interest rates also have the option of putting up a collateral.
- Additionally, banks now ask for very nominal processing fees.
- The promise of flexibility: As we mentioned in the previous section, business loans fall into many different categories, each designed to ease a specific area for your operations.
- Banks can create an overdraft facility on your current account, allowing you access to more cash than you have in the account. The interests on repayment of such overdrafts can be discussed beforehand and finalized.
- You can also avail Line Of Credit (LOC) loans that work similar to a credit card. Once the lender assigns a credit limit, you have access to the cash whenever you need it!
- Hassle-free processing: With loans available online and at various institutions around India, business loans are designed to specifically cater to the needs of SME owners. Loans are also available through government schemes and lending platforms. With simple, user-friendly and straightforward processing requirements, you will find applying for a loan to be a breeze!
Besides, business loans provide collateral free finance to SMEs that doesn’t require you to pledge any property or asset. So, what are you waiting for? Go live your dream.