Are you stuck in a rut of unstable cash flow? Are clients not paying up on time, or is there a sales dip or a rise in equipment costs for your business? And are you seem incapable of getting out of this rigmarole? Don’t worry; you’re not alone, there are countless small business owners who face these very issues on a daily basis. Fortunately, there are many MSME Business Loans available for them. There are also personal investments and commercial loans that come with their own unique benefits for both small and large-scale businesses. However, recent trends suggest companies are switching over to business loans for borrowing funds. Want to know why? Then continue reading!
What is an MSME Business Loan?
An MSME Business Loan is essentially an unsecured Business Loan given to micro, small, and medium-sized businesses for beginning or expanding business, along with covering related costs. NBFCs like Poonawalla Fincorp provide these loans to small businesses without the need for any collateral and allow you to borrow funds according to your specific requirements as and when the need arises, with a lot of repayment flexibility. If a borrower doesn’t use up the entire loan amount, they need only repay the utilized bit, returning the rest with no additional charges. This also encourages borrowers to use only as much as they can. This makes MSME Business Loans an excellent, responsible option
What are the Purposes Served by an MSME Business Loan For Businesses?
As a short-term funding system, MSME Business Loans can serve various purposes to boost financing or meet operating expenses. The expenses can include
- Improving cash flow during off-seasons
- Purchasing equipment
- Meeting the unexpected needs and requirements of the business
- Covering the payroll
- Purchasing supplies
- Increasing business credits
If your reason lies in the aforementioned list, consider taking a Business Loan. But before that, check the best Business Loan Interest Rates offered by NBFCs like Poonawalla Fincorp to be assured and at ease while repaying.
MSME Business Loans Benefits for Your Business
An MSME Business Loan can bode well for your business. Here are the reasons why you can opt for this:
- Higher chances of approval
Having a good credit score is always beneficial but even if you have a poor credit history, some financial institutions will be ready to give you a loan. If you’re a young business finding it challenging to qualify for a traditional loan with your credit score, you can always opt for this option, wherever available.
- It’s Affordable
While comparing loans, there is a lesser Business Loan Interest Rate to be paid on MSME Business Loans. Nevertheless, the rates will vary depending on your cash flow and other financial factors.
- Additional flexibility
An MSME Loan offers great flexibility to repay and reestablish credit limits, unlike the time-bound EMIs of a traditional loan. You can borrow up to ₹50 lakh and pay it back within a short term, without having to make any long-term commitments.
- Boosts business credit
You can borrow an MSME Loan to boost your business’s credit rating if you’re making repayments on time. Your score will increase and help in the future by assuring other providers who will also give you better deals on Business Loans.
- Have control over the capital
You have more control over your capital and can put it to use for a lot of business-related things: unlike conventional loans where you need to put the money to use only for certain things.
Set apart personal and business expenses
The one thing that small-scale business owners struggle with is separating their personal and business expenses. With an MSME Loan, you don’t need to foray into your personal savings. Also, having a separate account for your business presents a professionally sound outlook before your partners and investors, thereby increasing your business’s reputation.
Now, it’s time for you to kickstart your business!
For short-term financing, an MSME Business Loan is quite ideal. You get affordability with lenient terms and conditions that traditional loans can’t provide. Above all, you don’t have to worry about your credit score as that’s not the major focus here. So, compare your options to pin down the best deal.
Now it’s time that you kickstart your business’s short and long-term goals.