The best part of a small business is that it does not require much capital to set it up. However, there comes a time for every small business when it looks at additional means to finance its operations. There are several non-banking financial institutions and companies that present SMEs and entrepreneurs with a variety of loans, both secured and unsecured. A secured loan requires you to put up collateral, whereas an unsecured loan is collateral free.
How do you know when it is a good time to secure an unsecured business loan?
The best time to take a loan is when you don’t need it. If that is confusing, read on. The best time to take a loan is when your business is doing great and you have been running it for at least 2-3 years. When you begin to consider growth-focussed plans, then you know that you are ready for a small business loan. You should be making a profit, which will make it easier to take on the obligation of a loan.
If you are planning on any of these activities, then an unsecured loan is an excellent idea.
- Business expansion
For a business to grow, it needs to expand. Are you looking for more customers or perhaps setting up business in a new city looks promising. You could need a little extra finance when your business is expanding.
Do not invest your hard-earned money into your growth plans. There are several unsecured business loan lenders in India whose forte is SME expansion.
- New technology adoption
You might have started off as a one-person show, where you did everything by yourself. However, as time goes by you come to realise the benefits of technology and the convenience which it offers. Not all programs can be simply downloaded. Many professional software or technology that makes your operations more streamlined comes at a price. Instead of investing your own money into this, you can opt for a loan from any unsecured business loan lenders in India and up the ante on your business efficiency.
- To improve credit score
Do you know what improves your credit score? Taking a loan? If your credit score is stable and you wish to make it better, there’s no easer and assured approach than taking a loan. Don’t jump into one right away. Wait until your business has been steady for a few years, when it shows profit and you know that you will be able to effortlessly manage your loan repayment. That is the time you should consider taking a small business loan.
- New and large order
Congratulations. Business is great, and you’ve secured a big order. This means more raw materials or more people on the team. A small business loan, unsecured, is the need of the hour. Luckily there are many non-banking finance organisations that cater to this segment specifically.
Find a lender with the best loan terms and use the funds from your unsecured business loan to fulfil your business goals.