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How & Why Short-Term Business Loans Make Sense For Experienced Entrepreneurs
When your business has a vintage of 3 years or above, you've already experienced the challenges of set-up and know the nuances of your chosen industry. At this stage, your business may be ready to scale up its operations, hire experienced staff who can bring in new skills or even look towards acquiring new machinery to help reach the next stage in growth. For all these moves, a business loan can be a convenient way to access financing without diluting your ownership. At this time, you can choose a long-term or a short-term business loan.
A long-term business loan is a lengthy commitment and involves a substantial sum of money that your business may take over 10 years to repay. Usually, this money is used by firms who are just setting up, changing their business model, or diversifying into a whole new territory. On the other hand, a short-term business loan is one that helps you meet immediate needs at an affordable interest for a short duration, from one to five years. This type of business loan is ideal for you if you have a shortage of working capital, funds to purchase machinery, carry out activities like acquiring land or machinery for growth, etc.
Why you should choose short-terms business loans:
- They're easy to apply for online
- They have simple eligibility criteria
- They give you cash in the bank in just 24 hours
- They offer ample finances without restriction of use
- They are collateral-free so you don't have to pledge assets
- They are available at nominal interest rate
- They have flexible tenor from 12 to 60 months
- They allow part prepayments for easier loan servicing
- They have a Flexi Loan facility for meeting unpredictable financial needs
How you can use short-term business loans:
To fulfill short-term cash flow deficiency
Say you are running a seasonal business manufacturing woollen scarves and stoles. Domestic sales may not always be able to meet your annual financial requirement. So, until you have an export order, you will need funds to keep your business running. Faced with such short-term cash flow deficits, you can avail funds from a customised business loan for SMEs. Choose lenders like Bajaj Finserv to access loans on low interest rates with simple eligibility criteria set keeping your business needs in mind.
To strengthen working capital when sales targets aren't met
Unexpected business emergencies such as an urgent electrical malfunction in your office or a machinery breakdown at your warehouse will need immediate funding. Drawing funds from your working capital may not be a sufficient solution, especially if you are falling short of funds owing to a less-than-desirable sales turnover. While recurring sales shortages signal a long-term business problem that can be solved only through a complete evaluation and reorganisation of your operations, you can deal with short-term shortages by accessing funds from a business loan.
Avail benefits of the Flexi Loan facility offered on Business Loans from Bajaj Finserv. This allows you to withdraw and repay funds more flexibly when your need for finances are unpredictable. Here you get a sanctioned amount, from which you can borrow as much as you need, and pay interest only on what you withdraw. You can withdraw more when you feel the need without filing a fresh loan application. This way you can address various business cash flow shortages quickly and not pay interest on the unused sum. To solve your cash flow worries, you can also choose to pay interest-only EMIs and repay the borrowed principal at the end of the tenor.
To keep business running during late payment
Getting your receivables on time can be challenging. So, while you can work on streamlining payment practices or offer your clients early payment discounts, there may be some regular customers that have a longer payment cycle. To keep your business going strong, whether it is to credit staff salaries or pay your vendors on time, you can take a short-term business loan.
To buy machinery or equipment for expansion
Say you run a ceramic crockery manufacturing business. It is evident that to stay ahead of your competitors you will need to invest in the latest equipment and purchase superior raw materials. While you can fund this from your business revenue, what happens when you suddenly get a big order from a leading hotel? If you need more inventory or a specialised glazing machinery to fulfil this order, you can fund it by taking a business loan. This will ensure you don't miss out on big opportunities for growth.
To help shortfall at the end of the financial year
The month of March marks the end of the financial year, which also means this is the month you and your firm need to file IT returns. While you may have saved some money to pay as taxes, ups and downs in the business cycle may leave you with little to spare. So, you can make use of a short-term business loan to pay your taxes and for other business requirements to start the next financial year on the right foot.