All businesses require a constant source of funds for the day-to-day functioning of the business. A business can use loan funds for a variety of purposes like increasing working capital, building credit for future expansion, investing in equipment and inventory, creating more jobs or servicing customer orders and stock.
Today, the working capital loan is the go-to funding solution for all small and medium-sized businesses. To meet financial needs for any of the above purposes, businesses avail working capital loans from different financial institutions. Earlier, most business owners approached their bank to avail of a loan, but banks did not provide loans that easily. It can take a lot of time, effort, and paperwork to approve even a small amount of loan.
Taking a business loan could be one of the most important financial decisions that you make for your business. But many business owners think that loans drag them further into debt. In reality, business loans can actually benefit your finance by providing working capital and helping you to grow. Here are a few ways how.
What is a Business Loan?
Business loans are unsecured loans that financial institutions provide to businesses. This helps in overcoming your financial crunch on an everyday basis, as they generate a balance in the cash flow required for smooth business operations. You can apply for a business loan to lend money to meet your working capital requirements and handle the expenses of your business during the off-season, or you can use it for other purposes like setting up a new retail shop, buying new machinery and so on.
Financial Benefits of Business Loans
If you’re a business owner, you already know how important finance is to your business. Whether you want to buy new inventory, open a new office location or even pay salaries, you will require adequate amounts of money to fund these operations. Although businesses can use their loan amount for a variety of purposes, they still contemplate whether to take it or not.
- Create a Robust Infrastructure: MSME working capital loan is provided for small and medium entrepreneurs having a good track record. Msme enables you to make a significant contribution towards the growth of your business, to fund essential facilities like a storehouse and transportation network that will meet the demands of the marketplace, thereby giving your business all the necessary boost it needs to grow.
- Flexible Terms: Borrow up to ₹ 50 lakh and avail a short time period of 12 – 36 months, depending on the loan amount. If you are a self-employed professional or in the process of starting a business venture, you can apply for longer duration loans of 48 months with us.
- Management of Working Capital: Business loans are available to meet the working capital requirements of your business. This loan can prove to be a great way of meeting day-to-day and seasonal working capital needs, as well as investment opportunities. Business loans will help in strengthening your company’s financial stability.
- Collateral-Free Business Loan: Since the business loan is collateral-free, the business owner does not need to put any asset at stake. This makes it convenient for you to avail funds for your business without putting anything of value on the line. In addition to that, document requirements are minimal, thereby making the application and approval process faster and easier than ever.
- Build Credibility: Business loans are a great way to build a business credit rating. When you repay your business loan EMI regularly on time, your credit score gets a boost.
- Debt Restructuring: As a business, your funds might be coming from multiple sources, including loans from lenders like MSME and family, friends and other sources. If these loans are at different interest rates or terms, then it is likely that your loan repayment schedule will also be diverse. Consolidating all of this debt into one loan can help you save money on interest while making all repayments on time.
A business needs several essential things for smooth operations, including technology, manpower, and finance. Among them, finance is a crucial aspect that can ensure the satisfaction of all other requirements. Therefore, cash flow is extremely crucial for your business’s growth and expansion. MSME Flexi Business Loan helps you to get a business loan at low-interest rates. This is an unsecured working capital loan that can be used for any purpose such as buying machinery, upgrading infrastructure and for any business purposes.