Scenarios When It Makes Sense to Take Business Loan

By Internal Eseo - April 25, 2018

Business loans are a prudent mode of finance to take care of varied business needs. With non-banking finance companies (NBFCs) radically changing the lending landscape thanks to their customised and competitive loan offerings coupled with relaxed lending norms, availing a business loan today is a hassle-free affair. Read on to know the ideal scenarios when it makes sense to avail these loans.

1.       During expansion
Business expansion has its own advantages. Expansion enhances your customer reach, distribution channels, and revenues. However, expansion is easier said than done and involves costs pertaining to:
-          Land acquisition
-          Setting up infrastructure
-          Hiring new people
-          Regulatory compliance

All of these require a considerable amount of money and this is where a business loan comes handy. New-age business loans from NBFCs like Bajaj Finserv come with a flexi loan facility which allows you to withdraw funds as and when needed from your approved loan limit.

Also, you are charged interest only on the amount utilised and not on the entire limit, unlike term loans, thereby bringing down your monthly EMIs.

2.       Purchasing new equipment

To make your business competitive, it’s essential to have the latest equipment. Your machinery is a crucial asset and can make a huge difference in revenues and the way orders are handled and deadlines are met. However, buying modern and state-of-the-art equipment can be a costly affair.
This is where a business loan acts as an integral supplement for you, giving you access to funds to purchase the latest equipment. With flexi loan facility, you can withdraw funds as per your needs. Business loans also aid in situations where you may need to lease an equipment instead of buying.

3.       Improving cash flow

When it comes to financial management, cash is king. A strong cash flow is imperative for business survival and cash problems might lead to delayed payment to vendors, suppliers, and employees. A robust cash flow gives you the confidence to undertake critical business decisions. 

Recession in business, delayed payments from clients, etc., are some situations that can lead to cash flow problems. In such scenarios, a business loan is your most trusted ally that helps you tide over the cash crunch and gives you the flexibility to undertake key decisions. A competitive business loan interest rate ensures your EMIs are within your means and you don’t need to dip into your savings. 

4.       Lapping up potential business opportunities

An essential mantra of business is to lap up opportunities in the market presented by government policies and socio-economic changes. A sudden discount in ordering bulk inventory, fall in prices of raw materials due to lowering of taxes, etc., are some situations that require agile leveraging.

Quick availability of business loans with minimal documentation from NBFCs ensures you are not short on funds to lap up potential opportunities coming your way.

Thus, business loans give you that shot in the arm to further your business.        

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