India is home to a large number of small and medium scale enterprises. It is a known fact that the development of MSME (Micro, Small and Medium Enterprises) sector has contributed immensely to the growing economy of our country. As a result of this, several young entrepreneurs across the country are looking forward to establishing their own business. While establishing a startup, entrepreneurs have to take care of all the various aspects such as hiring employees, infrastructure, marketing strategies, customer service, etc. All these things require a substantial amount of capital. Therefore, most entrepreneurs consider availing a small business loan to fund their business idea. With leading financial institutions, availing a business loan has become a hassle-free process. Entrepreneurs can avail a business loan with attractive features from the comfort of their home. Let us have a look at some of the major benefits of a small business loan that has made it a preferred choice of financing for many entrepreneurs across the country.
Business owners can avail business loans according to their financial requirements. There are long-term and short-term loans that vary in loan amount and loan tenure. Usually, short-term loans extend up to a tenure of one year while long-term loans may be extended up to five years or more. Business owners can opt for a tenure that best suits their needs.
Convenient Repayment Options
Convenient repayment options reduce the repayment burden of the business loan. Entrepreneurs can opt for a repayment plan according to their requirements. Even the monthly installments can be reduced or increased according to the profitability of the business.
Affordable Interest Rate
Leading financial institutions provide business loans at competitive interest rates. The interest rate levied on a business loan depends on various factors such as the loan tenure, collateral pledged and the creditworthiness of the borrower. A good credit score can help the entrepreneurs avail a higher loan amount at a comparatively lower business loan interest rate.
The tax authorities in India allow the tax benefits to the companies that avail business finance. The interest on a business loan is tax-deductible. However, it is important to note that the principal repayment amount is not tax-deductible. As the principal repayment is just paying back the borrowed cash, it is not tax-deductible.
Business loan in India is designed to cater to the needs of small as well as large scale businesses. However, it is advisable to compare various loan products offered by different financial institutions before making the final decision. This will help you avail a business loan that best suits your needs. Let us have a look at the major aspects that you must take care of while availing a small business loan:
Financial institutions have different eligibility criteria for different credit products. Generally, lenders have stringent eligibility criteria for unsecured or collateral-free loan products. Whereas, in case of secured loans, the eligibility criteria are comparatively flexible. Entrepreneurs can avail credit on time by opting for secured business loan products. It is advisable to check the loan eligibility beforehand with the help of a business loan eligibility calculator.
- With leading NBFCs, entrepreneurs can easily apply for small business loans through a hassle-free online application process.
- The entrepreneurs can visit the official website of the financial institution, compare the available business loan products, apply for the business loan, and upload the required documents. Since the entire process is online, it is less time-consuming.
- Post verification of documents, the loan can be approved instantly and entrepreneurs can receive the loan amount within 24 hours.
Check your credits beforehand
A good credit score can boost your chances for approval of the loan. Additionally, it also impacts the costs of borrowing. Therefore, before applying for a business loan, you must have a clear idea about your personal as well as business credit score.
Check the collaterals
Collaterals in case of secured loans are security measures that protect lenders in case the borrower is unable to repay the loan. Most loan providers demand collaterals before approving the loan. Moreover, the amount that you can borrow also depends on the value of collaterals.
With leading Non-Banking Financial Companies (NBFCs), it is possible for small and medium enterprises to avail collateral-free start-up loan. Moreover, you can customize your business loan to suit your needs in the best possible way. However, to make timely repayment of your business loan, you should calculate the monthly installments beforehand with the help of a business loan calculator.