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How a business loan can save, sustain or grow your venture

Running your own business involves taking risks and exploring opportunities continuously. Challenges and opportunities present themselves on an ongoing basis, and it is up to you to figure out the best way to meet the challenges and converting the opportunities into channels for revenue growth.

A long-term business loan with a low interest rate would be ideally beneficial for business expansion.
A long-term business loan with a low interest rate would be ideally beneficial for business expansion. Photo courtesy: Canva

Whether you are beginning a business venture or are already running a successful business, there is a constant requirement for funds to either expand your business or just manage your business expenses.

Sometimes a cash crunch would impact even your short-term working capital, and it would be difficult even to manage your day-to-day business expenses like power, fuel, wages, maintenance, etc. In such cases, it would be wise to apply for a business loan online, as the same would help you tide over the temporary phase and enable you to bring your business on track. In these situations, a working capital loan would be ideal as it is for the short term, and you can obtain the same without collateral.

In case you are looking at expansion of your business either by adding a new office or plant, or are looking at investing in plant and machinery, etc. then a long-term business loan with a low interest rate would be ideally beneficial for you. It would enable you to scale up your business and there are a variety of lenders like banks or NBFCs who can help you out with your business loan at attractive rates of interest. You could opt for a secured loan, in which case you would have to provide collateral like land, property, machinery, etc. In such cases, the interest rate would be lower. In case you want to avail an unsecured loan, then lenders would look at your CIBIL score (a score indicating your creditworthiness) and the business track record, your financial statements, etc. 

Some of the areas where taking a business loan would help are as follows:

Marketing

If you want to improve and expand the target audience for any product or service, then constant improvisation and improvement of the products and services would be required, and here you can apply for a business loan to plan such an initiative.

Working Capital Requirement 

Business loans can augment your working capital at any point in time and any stage in the life cycle of your business. Thus, such a loan would help smoothen the cash flow which would have been affected by uneven demand or other seasonal factors.

Debt

If you are faced with multiple debts, a single business loan can be availed which would help consolidate all the debts and repay the same at a lower business loan interest rate. Early repayment would help enhance the credit score of your business.

Cash Management

Poor cash management hinders growth of any business, and a continuous flow of cash is required to meet the needs of the organisation. Business loans can take care of the challenges faced by the organization and help it recover its losses and get back on the growth trajectory.

Demand

In case of sudden surge in the demand due to various factors, a business loan can be availed for scaling up any business. Business loans are generally unsecured, and collateral or security is not required for the application. Timely payment of the loan enhances the credit score and thus the creditworthiness of the entity. If your credit score is higher then you can easily apply for a business loan again in the future if required. 

In conclusion, business loans are of great help in meeting the various needs and ensuring that challenges faced are met through the planned deployment of such loans to the business requirement.

(The views expressed by the author in this article are personal and do not reflect those of Connected to India.)

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Author
Ketan Choudhari
Ketan Choudhari
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