‘Why do I need a business loan?’ is one of the most searched queries in the world of entrepreneurship. A lot of people, including ones who have no idea of how a business works, have their opinion on this matter. At the end of it all, the stakeholders (you and your partners if any) have to decide whether a business loan works for you or not. But what is not a matter of debate is the benefits of a business loan, especially when it is timed right and done with the aim of improving productivity and performance. There are two primary ways in which a business loan, regardless of its size, can help you in a positive way:
Managing and maintaining working capital
Whether it is maintaining cash flow during tough times, or seeing out a tough economic environment a business loan can help you ride over these issues with ease. For example, you have a strong business model with good profit margins but your customers are going through a tough time. A loan will have you tide through these periods. Once you have the loan money, you will be able to not only finance your working capital, it will also give you a good idea of how much do you need now compared to earlier. This will help you plan the same with the long-term in mind.
Expansion of business
Whether it is a new office space, expanding your product to newer markets or simply trying to strengthen your footprint in existing markets, the added financial stimulus will ensure you have the right amount to invest. A new office, for example, might be needed because your current spaces are already full and you are planning on hiring again. An office kitchen is a cosy place, but it does not reflect well on your business if your accountant has to make space in it next to the coffee machine. Expansion can also mean increasing your digital presence for which you will need extensive digital marketing strategies combined with dynamic social media presence. All this can be done a lot easier if you have the money thanks to a business loan.
But before you expand, factor in whether you will be able to cover your costs (or whether they could be passed on to customers via price hikes) and the necessary steps you need to take to measure the potential change in revenue as a result of expanding your space. For example, if you are a retailer and plan on opening a second outlet, do a thorough background study of the area to understand how long it will take for you to turn a profit. This can help you decide the tenure of the loan. Generally, short-term loans have a tenure of one year while long-term loans may be extended up to five years or more.
Business Loan Interest Rates that make borrowing affordable
Like most loans, the exact rate of borrowing works on various factors like tenure, the profile of the borrower (including creditworthiness), collateral and the and various other factors. The NBFCs provide a loan with nominal processing fees and without any pre-payment penalty.
Thus, by lending at a competitive rate and nominal processing fees, borrowers can save on their lending cost. Bajaj Finserv Business Loans, available on Finserv MARKETS, come with easy and convenient repayment options. This ensures that the loan will work as a stimulus and not as a burden on the business. Also, remember that not all business loans require collateral. Bajaj Finserv Business Loan, available on Finserv MARKETS, are hassle-free and require no collateral or guarantor for an amount of up to Rs 30 lakh.
Small stepping stones for larger ambitions
You cannot drive a Ferrari before you have driven a much simpler car. Similarly, if you plan to apply for larger-scale financing or approaching Venture Capitalists in the coming years, you should start with small loans. Timely repayment of this loan will help your profile and build your business credit. This is also a smart way to build a relationship with lenders. Remember; tune your EMIs to ensure that at no point you default on your repayments.
A demonstrated history of regular payments is a huge plus, but a chequered loan repayment record can be disastrous. Now that you are equipped with the right knowledge, consider taking a business loan from Finserv MARKETS, a platform that focuses on transparency and ease of use, enabling you to secure your business with the financing it needs at any given moment.
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