Capital is one of the primary pillars of building up a business. Apart from the first significant chunk of finances required for establishing and regulating the market, there is a constant need for financial support to smoothly run the process. Traditionally, the only source of additional funds which a business owner could think of was through renowned banks. It is still a primary source, but over the time other options like non-banking finance companies, venture capitalists, online vendors etc. evolved for short-term needs. One such famous online lenders offering loans at competitive interest rates is Lend Genius. To plan your finances in a balanced way between debt and equity, you can always take consultation from financial planners like www.tips.thinkrupee.com.
Specific advantages of taking a business loan include:
• Helps with the cash flow needs: The primary target of every business is to maximize revenue and attain a competitive edge in the market. To achieve it, they have to continually invest in expansions, updating technologies and procedures, marketing campaigns and promotion. Short term loans support these needs adequately. The thumb rule to be followed is, whatever additional revenue earned out of these business enhancement activities should be used to pay back these loans, and the leftover margin to be used for further development. This way you will not create any additional credit burden on your shoulders.
• Speedy and smooth approval and sanctioning of loan: Unlike stringent and complex approval procedures of banks, the loan processes are simple, fast, hassle-free. With the involvement of online digital processing, it has become more user-friendly and convenient. Also with the government support favoring SMEs and startups, such short terms are readily available.
• Customized financial plans for SMEs: With the increasing market of such financial requirements, lending organizations have developed a wide range of tailor-made, super flexible products to cater the specific need of small and medium scale enterprises. The repayment options are also desirable. With no pre-closure penalties or security requirements and flexibility in the duration of repayment make it an exciting choice.
• Attractive and competitive interest rates: financial institution to motivate small scale business owners in opting for these short-term finance, competitive interest rates are being offered.
• No obligation to commit any collateral security: One of the disadvantages of bank loans is to you need to pledge any property or asset as security so that if you fail to repay, banks can auction your asset and recover the amount. But for short-term loans, only your cash flows and expected receivable are evaluated to grant the loan amount.
• Tax benefits: There is the option of tax benefits for small-scale businesses availing loan from banks. The portion of profit used to repay the loan is exempted from tax.
It is vital that you have full clarity regarding the terms of the agreement before entering into it. Some of the factors which should be evaluated are frequency and deadlines of repayment schedules, calculation of interest rates, the customer support assistance available for any clarification and the sought of penalties levied in case of delayed payment. The authenticity of the lender is equally crucial since you are going to share your sensitive personal information with them.