Unplanned need for financing is often a common scenario for businesses seeking to grow and expand their ventures in both short and long terms. While small financing needs can be easily managed through proper fund allocation and cost control, it is the high-value lump sum funding requirements that push businesses to look out for financing. Thanks to the easy availability of business loans today, one can avail of lump-sum funding with much ease. These loans are available as big-ticket advances and can be availed as unsecured funding without you needing to risk any personal or business asset.
In case you need financing of much greater quantum, secured business loans are also provided by various lending institutions against different sets of requirements. Now, while they are easily available, these loans are also financially advantageous for a business in both the short and long run for versatile reasons. We will take a look at some of them to better understand why and how these advances can be beneficial.
Reasons Why a Business Loan Turns Out Beneficial for Your Venture
Out of so many reasons available, we have picked out some of the best ones so you understand how a business loan can be beneficial for your venture’s finances.
Flexible funding options
Business credit is only an umbrella term, under which you can avail a versatile range of finances to meet specific business funding needs. You may need business funding for various reasons, like to improve cash flow, purchase equipment, pay debtors, expansion of existing sales market, the opening of new office space, up-gradation of equipment, and the likes.
While all these funding needs can be fulfilled with business loans themselves, dedicated financing for each expense would mean a better-organized credit structure of the business. This would also help in the overall financial management. You can thus avail loan options like plant and machinery loans, working capital loans, equipment purchase loan, and the likes to meet respective financing needs.
Convenient working capital management
A business’s working capital can be the necessary fuel pedaling the venture towards growth. It is thus essential that a business maintain its minimum working capital requirement and keep the cash flow intact. It allows easy flow of day-to-day operation of the venture.
Nevertheless, such flow of cash and funds can be disrupted from time to time due to unavoidable reasons, resulting in working capital reduction. At such times, a business would need additional capital infusion, which a business funding in the form of loan can help with. One can look out for the right loan for their business with several lending institutions providing these advances with attractive features and facilities. With some of the reputed lenders, the unsecured financing value can easily go up to Rs.25 lakh.
Interest rate affordability
With increasing competition among lenders to provide the best features and facilities, borrowers stand to benefit. One of the most prominent benefits of such competitiveness is the reducing rate of lending for business finances. Further, to promote economic growth and development, the state and central governments have also introduced various schemes that allow eligible businesses to avail these loans at subsidized rates.
All of these combine to increase the interest rate affordability of business finance for enterprises of all sizes and scales. A business can thus easily utilize credit and repay it in time to ensure proper loan management.
Absence of collateral
As these advances for business are unsecured, you can avail funding in the complete absence of any collateral. Usually, businesses availing funding look forward to raising money without needing to risk any of the existing venture’s assets as this increases their overall burden. Business loans available without any asset collateral altogether remove such burdens, allowing businesses to avail as much funds as required just on the basis of their creditworthiness and the overall financial stability.
Improvement in business’s credibility
One of the most easily recognizable financial benefits that these loans bring to businesses is that they help improve the overall credibility of the venture. To understand this, you need to grasp the concept of how the financial credibility of any entity is determined.
When a business or individual availing any credit repays the advance time and in full, with consistency over a duration, it is observed as a creditworthy entity. In the case of business finance, the EMIs are affordable and the tenure comfortable for total loan liability repayment. It allows the business to repay the advance availed consistently, thus helping them build creditworthiness in a short duration. Such reputation among lending institutions comes up to much help when seeking funding in the future.
Quick availability during emergencies
Most of these business loans are available online today, and you can apply for them in a few simple steps by visiting your selected lender’s official website. Along with a simple online application, these loans also require minimal paperwork, which means the elimination of unnecessary application processing steps and quick approval of the advance.
Thus, if your business meets all the eligibility and paperwork requirements, approval of the loan should not take more than a few minutes. Following this, many reputed lenders have also reduced the disbursal time to less than 24 hours. It thus allows your business to meet is emergency funding needs, easing any financial strains the venture may face.
An extended tenure for repayment and easy EMIs
Depending on the financing value availed as business loan, you can choose a suitable tenure of 5 to 7 years. This allows you to plan repayment better as per your business’s financial standing. It also helps select a suitable EMI that helps fulfil your repayment liability timely without straining the business finances.
All these factors combined with multiple repayment options that the lending institutions provide help provide an overall advantage of borrowing. Plus, businesses can always leverage their eligibility to negotiate with the lender for a competitive interest rate and other favourable terms on the business loan for the overall optimization of existing financial benefits.