What Are The Benefits Of A Small Business Loan
What Are The Benefits Of A Small Business Loan

A business loan or MSME loan is the financial products which are sanctioned by financial institutions, such as banks and NBFCs. The loan is sanctioned for a variety of purposes. Their repayment tenure and rate of interest varies from one lender to another. The loan amount helps the small business owners in efficient business operations and realise the organisational goals without putting too much stress on the liquid funds or working capital. Business loans can be repaid in easy EMIs. So, the business owner gets to plan the finances better, and he can use money more productively.

Several loan lenders are operating in the financial market. Online Lending Companies have emerged as the preferred option for SMEs and MSMEs. Online lenders conduct their operations online through a website or mobile App. It allows the business owners to apply for a small business loan from the comfort of office or home. All the business owner has to do is upload the soft copies of the required documents to support the loan application. If the profile meets the requirements, the application would be approved, and the loan amount will be disbursed within a few working days.

If the annual turnover of the business is above Rs. 5 lakh, the business owner can apply for a business loan of up to Rs. 5 lakhs with a repayment tenure of 24 months. Additionally, online companies use an independent credit evaluation process where they determine the creditworthiness of the borrower holistically. It is worth mentioning that they give due importance to the CIBIL score as well.

Read on to know the benefits of business loans for an SME in India.

No Change in Ownership

There are multiple options to raise business funding, such as funding, venture capital, private loans, etc. But all these options mean giving up a part of the ownership to the funder. As many business owners have an emotional connect with the business, they might hesitate in doing so. In such situations, a business loan helps in the best manner. The financial institutes do not want ownership in the business; they only wish the loan amount to be repaid on time. So, the control of the business remains with the business owner.

Flexibility in Repayment

Business loans are offered by banks and NBFCs. However, if they are availed from NBFCs, the business owner gets flexible repayment structure, i.e., he gets different options, and he can choose any one according to his pocket. It reduces strain on the finances. The business owner gets flexibility in repaying the loan, and he can repay the loan easily.

Lower Rates of Interest

The interest rates are lower and affordable if the business loan is availed from an online lender. Also, the rates are comparably affordable from other borrowing options, such a credit cards, and private money lenders. Thereby reducing the strain on the finances.

Multiple Options

Small business loans are available in a wide variety, ranging from machinery loan and working capital loan to capital loan and flexi loan. So, it is important that the business owner first analyses his needs, perform thorough research, and then choose the loan that best suits all his needs.

Applying for a small business loan is a wise decision for the SME owner. He needs to perform a bit of research and then select the most suitable product for himself.

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