Should I Apply for a Business Loan to Support My Innovation Goals?
Being a small business owner does not mean that you cannot have innovative ideas that have huge potential. Instead, in the recent past, all creative and incredible ideas have come from the most unsuspecting individuals, who were running a small business or working a day job. But what took them to success was having a firm belief in their idea and then pursuing it relentlessly.
If you feel that this is the end of the road for your plan as you do not have any more funds to put that idea into practice, there are specific ways to help yourself out from this situation and the most useful one for you is applying for a Business Loan.
What is a Business Loan?
A Business Loan is sanctioned by financial institutions such as banks and non-banking financial companies (NBFCs), for various requirements of a business. There are two main types of Business Loans, Unsecured Business Loans and Secured Business Loans. These loans are sanctioned for a variety of purposes, and depending on the proposed usage of their duration and rate of interest varies.
Business Loans help small business owners like you to your operations and realise the organisational goals without stressing upon stress on your working capital flow. Business Loans have to repaid in monthly EMIs (Equated Monthly Instalments),so you get to plan your finances better and put your money to more productive use.
Why Should You Apply for a Business Loan?
As discussed above, even the most innovative ideas need time and money to realise their real potential. If you do not put your whole-hearted efforts into the new venture, it is bound to fail. So rather than ruing your ill-luck, you should get up and apply for a Business Loan, as it would help you support your innovation goals through various benefits such as:
No Change in Ownership
You have multiple options to raise the required funding to pursue your innovation goals such as venture capital, funding, private loans, and so on. But all these involve you giving up a part of your ownership in the business venture. As you have an emotional connect with your idea, you might hesitate to do this.
In such a situation, Business Loans help you out. Financial institutions do not want to dilute your ownership while extending the Business Loan; they only want you to repay the EMIs on time. So, the control of business rests with you while you pursue your innovation goals.
Flexibility in Repayment
Business Loans are offered by both banks as well as NBFCs for a variety of purpose. Some of the Business Loans come with flexible repayment structure where you can get EMI holiday or EMI free months which reduces the strain on your finances as you get a moratorium period to commence the repayment of your loan.
You only need to serve the interest for such period, and the principal is adjusted in the subsequent loan tenor. This offers you great flexibility in terms of repayment, as you can establish your idea and then worry about the repayment. You need not make any significant repayments towards the loan, just keep on paying the monthly EMIs.
Lower Interest Rates
Secured and Unsecured Business Loans are available at lower rates of interest as the chances of default are less, and even if there is a default, lenders have various options to recover their dues.
Some lenders might also ask you for collateral to guarantee the payment of their money, and if you don’t have any collateral, you can also get a guarantor on board. Whatever option you choose, the fact of the matter is that the rate of interest on Business Loans is lower and more affordable than various other borrowing options available.
Multiple Options Available
Business Loans are available in a wide variety with some specialised loans available at lower interest rates. The Government of India is also offering concessions on loans meant for small businesses or start-ups.
So, analyse your requirements first, do your research and then opt for the loan that suits your needs best. Remember to negotiate hard with the lenders to get concessional interest rates.
Improved Cash Flow
When you go for a Business Loan to support your innovation and expansion goals, you need not withdraw a considerable amount of cash out of your cash flow. This ensures that your core business is not affected by your new idea and you can still pursue your expansion goals without having to worry about the money.
Applying for a Business Loan is a wise decision to support your innovation goals and expansion dreams. You just need to do a bit of research and then select the most suitable option for you.
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