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Useful Tips to Expand Your Business with Small Business Loans

Capital is the lifeline of any business, whether big or small. The more capital you have, the more scope there is to sustain and grow your business.  

But for most small business owners, the biggest challenge lies with small business financing. Conversely, the easy availability of capital can help resolve issues that would otherwise stunt a small business.

As such, taking a business loan can prove to be a viable solution - and bring in an unspeakable sense of relief.

Here in this article, we explore the best options available to take a business loan in India, and the advantages attached to them.

Types of Loans for small business

Generally, there are two types of loans, namely term loan and working capital loan.

Further, there are two types of term loans – secured and unsecured.

  • Under secured loans, the collateral can be immovable property, machinery and business premises. Also, secured loan attracts lower interest rates than an unsecured loan.

  • An unsecured business loan is one without any collateral. It helps SMEs and startups raise debt for purposes such as equipment financing, project financing and expansion.

All said, small business loans are the preferred option for startups and small businesses to grow their business. Here are some of the advantages associated to taking them.

  1. Convenient and accessible

Almost all banks offer business loans. Since banks are regularly used to deposit and withdraw money, they instinctively become the first choice for taking a loan. But there are several other financial institutions and NBFCs (Non-Banking Financial Company) that also offer business loans at attractive interest rates.

  1. Many loan options

When taking a loan, alongside business finance (the management of company capital) - interest rates, tenure period and other charges are most likely to prompt your decision. With many options to choose from, simply select one that suits you the best.

  1. Non-profit sharing

Unlike angel investors and venture capitalists, banks, NBFCs and other financial institutions never ask for profit or ownership.

  1. Reduced rates of interest

Although you need to follow protocol and get approved, banks tend to provide loans at reduced rates of interest as compared to lending agencies and other instruments like credit cards.

  1. Tax benefits

Since a major share of the profits are used to repay the loan, the government provides a tax rebate to business loan holders.

Now that we’ve piqued your interest about the advantages, find below:

Tips to expand your business with Small Business Loans

  • Once you have narrowed in on a loan and addressed important aspects such as amount of money needed, allocation of said money and loan repayment options, you can then look to deploy a steady expansion plan.

  • You can use your loan amount to develop infrastructure, buy more inventory, hire additional staff, cover operational expenses and even build a website to enhance your marketing reach.

  • When you don’t have to fret over capital, you can focus on optimizing resources to build and better your business over the long haul.

How to apply for small business loan?

With a free flow of capital, you can finance all the different needs of your business and take it to the next level. Banks, NBFCs and financial institutions form the largest providers of small business loans in India. Typically, safe and secure, they tend to be preferred option when it comes to small businesses. To apply for small business loan, you can either visit them directly or find all the required details online.
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