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Tuesday, December 6, 2022

How a Business Loan Can Save, Sustain, or Grow Your Profitability?

You have a solid business plan and you have crunched the numbers many times over. The probability of your business soaring is very high and recently the market has aligned itself to suit your plan. However, if you do not have enough funds at your disposal then all your ideas of taking the opportunity from the market might never see the light of day. These situations can be dealt with through a Business Loan—whether you want to expand your profits or steady the ship that is your business, a Business Loan will serve your requirements and help you achieve what you set out to. 

Business Loans are given to business owners to meet running, expanding, consolidating, upscaling, upskilling, and sustaining costs for their businesses. Small business loan in India from modern non-banking financial companies (NBFCs) like Poonawalla Fincorp are collateral free, with attractive interest rates, and quick disbursal. 

You make timely repayments along with interest, so it is advisable to choose a rate that is well within your budget for repayment. There are many options available, and you can assess them easily using an online loan calculator.

How are Business Loans Better than Other Options?

  1. Convenience: Business Loans are more accessible to procure than meeting investors and convincing them of your idea’s profitability. In the case of a Business Loan, your belief in your idea is enough and you do not need to spend months arguing, making various presentations, and repeating yourself. 
  2. You keep the profits: In the case of an investor, they want a slice of the pie which should be yours. Financial entities lending you a Business Loan do not want your profits, all you need to do is make timely repayments and you are free to use your profits for sustaining and growing your business. 
  3. Independence: Investors tend to interfere when it comes to business operations. You do not need to explain every major decision to a board every step of the way. A Business Loan helps you keep your head focused on growing and sustaining profitability and you can spend the profits any way you want.
  4. No collateral mandate: You do not need collateral to secure a Business Loan. New businesses, especially cottage, medium, and small-scale industries do not need to pledge any assets to get their loan requests approved, provided they meet certain requirements. This allows for quick access to the loan amount, particularly helpful during a liquidity crunch. The reduced paperwork also helps you secure the loan sooner rather than later.
  5. Tax benefits: As per the Income Tax Act 1961, if you pay your interest from your business profits then you can avail deduction on your taxes. The law means that the money you pay as a business loan interest rate is not included in your gross income. This is a huge plus for anyone who wants to grow their business and an incentive for those looking to maximize profits.     
  6. Some caveats: If you wish to grow your profitability, you need to keep in mind certain things. Do not spend your Business Loan on a huge marketing campaign that can go bang or bust, using up all your capital. Invest and secure the essentials first: like inventory and equipment that you’ll surely need. Build your website and try to market yourself strategically and locally with relevant content. You should also add buffer stocks, and plan and make timely assessments over months or quarters. You should also know to schedule your payments so that you do not miss your dates. Finally, borrow only as much as you need. 
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