Running a small business is an overwhelming experience for a business owner. You have to put in your blood and sweat to get the business started and then keep it running. You need to devote additional hours and travel extensively, all over the country as well as abroad, to make sure that the business stays on the track of growth. Initially, when you have to get the business started, you pool in money from different sources and use your own savings, but after a certain period when you are looking for business expansion, your own funds might not suffice. In such a situation, taking a business loan is the best option at your disposal.
What is a business loan?
As the name suggests, a business loan is a lending facility that is offered by banks and NBFCs in India for business owners. The money borrowed as a business loan must be used for a business-related purpose only. Depending on the nature of requirement and business profile, the business loan could be secured and unsecured
Secured Business Loan: – This type of business loan is secured against an asset that is hypothecated with the lender. The money borrowed has to be utilised for the specified purpose only. The maximum business loan amount available is directly proportionate to the value of the asset to be hypothecated. These loans are usually suitable for capital investment purpose.
Unsecured Business Loan: – This type of business loan is unsecured in nature, i.e. there is no need to hypothecate an asset to secure the business loan amount. The money borrowed could be used for any business-related requirement, as per the discretion of the borrower. The maximum repayment tenor for the unsecured business loans can go up to seven years, making them an ideal financing option for various business requirements. It is an ideal option for a short-term liquidity crunch. You can apply for an unsecured business loan online as well as offline, depending on your requirement and preferences.
Why you need a business loan for your business growth?
After a certain point of time, your personal funds are going to dry up, and in order to keep your business growing, you need to look at alternate sources of finance to keep it on the growth track. Following are some requirements for which you can avail a business loan: –
Purchase of new machinery
In order to enhance your production levels and reduce the costs involved, you must invest in the latest machinery and equipment on a regular basis. Rather than taking a huge chunk of money out of your working funds, which might leave you facing a liquidity crunch, you shall avail a machinery loan. This will help you acquire the required machinery without stressing your finances.
Purchase of new office: – If you want to open a new office at a new location for business growth, you can take a business loan from the lender of your choice to help you acquire the property and then repay the loan in convenient EMIs.
Upgradation of infrastructure: – You can avail a business loan to upgrade your infrastructure and capacity expansion. It is important to keep your business on the growth track and keep your products and services relevant according to the changing times.
Working funds requirement: – If you are facing a short-term liquidity crunch, then you can avail a business loan to take care of your daily expenses like payment to suppliers, utility bills, salary, and other essential business functions.
Inventory maintenance: – When you get a new order that must be delivered in a time-bound manner, it will be required on your part to upgrade your production capacity. You can avail a business loan to purchase the required raw materials, prepare them in advance and store it to be dispatched later.
Business loan offers you an excellent option to supplement your finances that helps make sure that your business growth is not hampered by lack of funds.
There are many lenders operating in India, who offer different types of business loans to meet your requirements. You may choose to apply for a secured or unsecured business loan online or offline. It is recommended that you take help of an expert to prepare your business loan application, as it would help in ensuring that your business loan application is approved at the first instance itself. Do remember that the funds you borrow carry an interest cost, so borrow only as much amount as you require and repay as soon as you can