For any business whether big or small, capital is always a major concern. In other words, no business can sustain or grow without capital. To fulfill their capital requirements businesses can opt for small unsecured business loans as they require no collateral and are easily available through lenders.
A business can then utilize the loan funds in many ways such as to purchase inventory, perform expansion activities and avail tax benefits. There are different types of loans available for different types of businesses. All an owner has to do is find the right one for their own venture.
In the article we will discuss the benefits of small business loans and how they can help to grow a business into a successful enterprise:
- Easy available and conveniently sourced: Small unsecured business loans are easily available in the finance market. There are many lenders available in the market such as banks, NBFC’s, financial institutions and digital platforms which offer unsecured business loans. A borrower can visit the branch of a bank, or even consult with digital lenders online to get the best loan deals. No matter, which option a borrower chooses he can rest assured about the interest rates and other charges associated with the loan.
- Flexibility: There are several types of small unsecured business loans being provided by lenders to help businesses fulfill their different requirements. For example, many schemes like CGTMSE are being offered by the Government to help Small and Medium enterprises in setting up and expanding their business. In addition, under the CGTMSE scheme, the borrower is not required to give any collateral or third party assurance. Instead, the provision of assurance is provided by the trust to the lender.
- Timely repayment: Whether it’s a bank, NBFC or Digital loan provider no lender will ask for profits or ownership while providing unsecured business loans. The only thing they require from a borrower is timely payment of installments. That is why it’s convenient for borrowers to go with loan providers rather than investment companies. Also, owing to their flexible nature, lenders provide easy repayment options under which borrowers can also increase or decrease the EMI depending upon their financial condition. Not only this, borrowers can choose to make bullet payments (i.e. lump sum payment of the entire loan amount) instead of periodic ones.
- Tax advantage: Unsecured business loans help borrowers avail tax benefits. Under certain sections of the Income Tax Act, it is stated that profit paid by the business for repayment of the loan is exempt for tax.
- Market development: Creating an attractive website and placing online advertisements should not be the only way a business develops its market. Offline marketing is equally as important as online marketing. All strategies require funds and the same implies here as well. By taking unsecured business loans companies will be able to carry out market research as well as ATL & BTL activities to generate more leads. More leads will convert into more customers, thus increasing the sales and popularity of the product.
- Meet operational expenses: Running a business involves a lot of ups and downs. Due to which a lot of unnecessary expenses can also arise such as additional account management, stocking up on extra inventory and paying the staff for extra work/overtime. All of these expenses are borne by the business owner. In such a situation having a small unsecured business loan will help the owner to bear these expenses easily. In fact, it can eventually help the business to recover from such downfalls.
- Refinancing: The option of refinancing refers to paying off multiple loans from a single new loan which has a lower interest rate. A business can take an unsecured business loan to pay off multiple loans and thus save up a lot of additional interest payments.
- Expansion activities: A lot of planning and investment is required to carry out expansion activities. If your business is lacking in the finance department then taking a small unsecured business loan will be the best option. The proceeds from the loan amount can be utilized towards improving infrastructure, purchasing more inventory/ machinery and increasing the manpower to carry out more production. Investing in these areas will assure the growth of the business.
- Increasing Manpower: Most businesses perform such an investment with the help of unsecured business loans. Increase in manpower automatically increases the productivity of the business. For example, a company has 50 employees and after taking an unsecured business loan the number of employees increases to 100. Then the productivity, as well as work performed by the employees, will increase in double numbers.
- Infrastructure: Infrastructure is an important aspect for any business. Different businesses will have different requirements. One might need a new office space and another might need a workshop for carrying out assembly operations. No matter what the requirement, at the core of every business plans to grow and this is something which is not possible without a good infrastructure. For such purposes, small businesses can avail unsecured business loans which are easily available and require zero collateral.
- Increasing Stock: Maintaining stock levels helps a business to meet customer demands. Most businesses prefer to take small unsecured business loans to purchase inventory. By doing so they are able to save up on costs and increase the productivity of the business.
After you secure funds through an unsecured business loan it all comes down to how you will utilize the cash. Smart investments will result in the growth/ expansion of your business and ultimately increase its profitability.
If you are looking for a trustworthy lender, we suggest you have a look at Indifi’s investment products. They offer customized loan solutions for every business. Also, their easy repayment policy and fast processing features make them the best loan providers in the market.