Whenever we think of taking a loan, personal or business, the first thought that crosses our mind is “I did not manage my finances well”. Well that is not true. If you have been living off loans for long, you might seriously want to sit and plan your finances. However, loans taken for the right reason and at the right time are beneficial; be it an individual or business. Here are some reasons to convince you that small business loans help.
1. Business Loans Help Build a Credit History:
Small businesses often struggle, when it comes to getting working capital loans. This is mainly due to a poor credit history or a complete lack of one.So, taking small business loans will not only help you address your SME financing requirements, but also help build a credit history. However, be careful! Don’t just go out and apply for a loan without a plan.Be sure that you have identified areas in your business that need immediate financing.You should also be able to repay the loans in a timely manner, without hurting your bottom line. Inability to repay the loan, will only drop your credit rating and end up making things worse for you and your business.
Benefits: Small business loans help you lay the building blocks for higher amounts of working capital loans in the future. A good credit history with timely repayment of the business loans can improveyour borrower profile, hence giving way for large-scale financing in the future.
2. Fund Your Small Business: If you’re in need of some quick and easy cash an unsecured small business loan can help. These loans come without any collateral or guarantee requirement. You can use this loan to purchase equipment and inventory for your business or complete a big order you just bagged, on time. Typically, one would think “banks” when it comes to source of funding a business, but sadly banks take anywhere between 4-6 weeks to approve a loan. On the other hand, there are several lenders in the market these days, who can disburse a loan to you in as fast as 3 working days. These lenders, do not ask for collaterals and can offer customized services and loan options, as per your requirements. Just make sure you have researched and reviewed all your options well, before accepting a loan.
Benefits: Unsecured business loans can help in creating value for every rupee invested into the business, with the end objective of revenue generation and business growth.
3. To Grow & Expand Your Business: Unsecured business financing for SMEs that have been profitable for 2 or more years can use these funds in a different way. You can think of expanding to other geographies, installing a new plant, increasing manpower to increase your output and sales or even invest in technology upgradation of your company. These loans are personal investments that will help you secure a higher income in future. To finance such items, secure loans that you can repay comfortably using your current income. Do not plan for income that you haven’t received. Do not take a loan to fund activities that don’t add value to your business.Never use debt to fund activities that can be avoided.
Benefits: Apply for unsecured small business loans to finance growth and expansion of your business.
4. To maintain liquidity
Small businesses, often face challenges in financing their day to day operations. A business may need funds to purchase new machinery, increase staff or even buy raw material for completing an order. Traditional lenders like banks and traditional NBFCs offer SME loans at lower interest rate but are very slow in approving and disbursing a loan. Thankfully the situation has now changed and a lot of new age financial institutions have entered the SME lending space. These lenders (known as Fintech lenders) offer quick and easy short-term loans that ensure the day to day operations don’t stop. Unsecured business loans from such lenders, come handy to keep the business afloat.
Benefit: A small business loan gives you the peace of mind and allows you to focus on matters related to growth and new business. A timely application for a small business loan prevents loss of big orders, income and even ensures continuous production and output.
5. Small Business Loans as Contingency Funds: Unsecured business loans for SMEs come handy for the unexpected situation that a small business may encounter. Taking out a business loan, instead of using your credit card or personal, is always a safer bet. Business loans from a reliable lender ensures that business productivity is maintained with no effect on your personal finances.
Benefit: Taking up a short-term loan to recover from unexpected financial challengescan be more cost effective than using your credit card, which may attract higher interest rates.However, make sure you don’t act in haste. Research your options well and take the best loan available from a trusted lender.
6. Debt Consolidation: Taking small working capital loans for your business is a great way to consolidate debt. More often, than never, small businesses find themselves facing multiple debts. Thus, for the ease of management of such credit crisis, it is recommended that you obtain a loan that helps you pay off the debts on time. It is also advised that you deal with one loan instead of several. However, a word of caution here is, do not lose control. Otherwise you will end up in debt trap. Use unsecured loans for debt consolidation only when really needed.
Benefit: SME loans can take loan to cover urgent needs and avert a loss of income or revenue. An added advantage of doing so is to take advantage of better interest rates, cleaner books and savings in the long term.
SMEcorner is a trusted name in the SME lending space. Located in Mumbai, this fintech company helps small and medium enterprises with unsecured business loans between 2 to 30 lakhs. All you need to do is fill in a simple online application form and know your loan eligibility immediately. If you can produce the required supporting documents, you can get a loan in your account in as-fast-as 3 working days. Visit www.smecorner.com or call 9987535888 to know more about SMEcorner’s loan products.