No smart business ever said, “No, I don’t need a loan.” It is not a matter of principles or even a measure of one’s success, it is an option that is available and businesses should avail as and when the need arises.
It is never advised to pour all your savings into the business without keeping some aside for a contingency. Neither is it a good idea to let your business grow at the pace your existing stash of money can offer. A new business needs to get up and start running from early on, and for that it needs cash.
Unless a business records commendable sales and subsequent profit, the other obvious alternative is a business loan. If you are an SME in India, there are many options available for you. However, before that, let’s quickly look at the benefits of SME financing in India against more traditional avenues.
- Helps with Cash Flow
If you wish to explore a new business opportunity or hire new people or invest in new equipment, you need cash. Taking a business loan equips you with the financial wherewithal to fulfill these plans to the best of your ability.
- Easy Processing and Faster Loans
In India, there are many ways of getting finance other than a business loan. However, as those are not always regulated means, there are no clear-cut, defined ways of operating. And processing and disbursing of funds could take a long time. On the other hand, with SME loans in India, all documentation and approvals happen online, and you get the loan quickly.
- Flexible Repayment Options
Not all lenders allow flexible repayment options. With a business loan, you can stagger the repayment of your loan as per the many options available to you. If you can predict your income, you can opt for an EMI. You can even take a flexible EMI option where you pay smaller sums initially, and then as the investment pays out, you can pay higher amounts.
If you are unsure of how the investment will pan out, or you know that your business growth is in spurts, you can make periodic lumpsum payments.
- Loans Against Receivables
If you have applied for a loan against receivables, a business loan often gives you the flexibility to repay it in a single ‘bullet’ installment upon at maturity. If your loan is an unsecured one, you can repay the amount through EMIs.
- Competitive Interest Rates
When you borrow money from an individual, you don’t have control over the interest rates. When it comes to SME loans in India, there is tremendous competition and you can select the lender based on the interest rate that is most convenient and affordable for you.
- Collateral Free Finance
Business loans are of two types – secured and unsecured. While a secured loan might need collateral of some sort, the unsecured does not. Moreover, the likelihood of your loan getting approved rests less on what you can put up as collateral and is evaluated more on your credit rating, a strength of your cash flows and expected receivables.
For businesses looking for financing options, SME Corner offers unsecured business loans with the right-sized loan values. Connect with us at www.sme.corner.com