As we head into 2022, you and many other small business owners like you may be considering growing your business in the new year. While business growth takes serious planning, great execution, and time, one of the most important factors in the scale of your growth is funding – how much money you have in the bank to invest in the business growth.
A business loan is one great way to fund your growth. Here are some ways getting an SME loan can give you that extra boost you need to grow.
1. An SME loan can fund your immediate financing needs.
When you get an unsecured business loan, you do not need to put up any collateral or security in exchange for the loan. If you are a creditworthy and eligible business with a good enough credit score and strong finances, such loans easier to procure and are not earmarked for any specific type of business expense.
Since lenders do not need to spend any extra time validating the ownership, authenticity, and valuation of your collateral, unsecured business loans get sanctioned and disbursed relatively quickly so they can be used to fund your immediate cash needs.
2. Business loans help build your credit history.
The catch-22 with a business loan from a formal lender is your credit history and credit score.
When someone applies for their first job, they soon find out they’ll need 2-5 years of work experience to get an entry-level position. When you apply for a business loan, you’ll find out that to qualify for a business loan, you need a high credit score, and one of the main ways you can have a high credit score is you’ve already taken credit from a lender.
So, when a fresher enters the job market, they find themselves doing multiple unpaid internships to gain some work experience to qualify for entry-level full-time jobs. However, unlike the employment market, there are a few ways you can build your credit history and score and become eligible for higher-value loans at preferable terms.
Any time you borrower from a formal lender or start a credit card account, you are building your credit history. Everything you borrow and pay back gets recorded. What matters here is how much of the amount of credit available to you, you utilize every month and how regularly you pay back what you owe your lender.
So, borrowing a business loan from a formal lender, no matter the value, and then paying your loan EMIs on time builds your credit history and your credit score, making you eligible for higher value loans in the future.
3. A business loan can help you expand your business.
Long-term business loans (higher loan amount, lower interest rate, and longer loan repayment period) are good options to fund your business expansion.
You may be considering opening a new workshop, hiring new staff, or introducing a new service. These tasks take considerable resources and may take time to turn a profit. In such a scenario, as a business owner, you don’t want to have all your capital tied up in this one part of your business. So, you can borrow a secured term loan, dedicate it to your expansion plans.
Many of CreditEnable’s lender partners give our SME borrowers secured term loans at interest rates starting at 8% in exchange for collateral. These long-term loans are a great way to invest in your business expansion while ensuring your current operations and cash-flows are not affected in any way.
4. A business loan helps you maintain liquidity.
One of the biggest expenditures any small business has is recurring expenses such as employee wages, supplier payments, rent, utilities, etc. Working Capital business loans are designed for this specific SME need.
Some of CreditEnable’s lender partners even offer customized SME loans such as invoice financing, which help you maintain steady cash inflows when your working capital is dependent on customers paying you.
Once you know your daily expenses are covered, you can allocate your remaining funds towards investing in business growth at ease.
5. Business loans help in debt consolidation.
Some businesses tend to borrow small amounts of money from different sources. They may be from friends and family, informal or formal lenders, chit funds, government schemes, etc. All these business loans may follow different timelines and interest rates. As an entrepreneur, you already have so much work to do. So, adding this to your list increases the possibility of errors and missing an EMI payment here or there.
The goal is to get business financing and keep your creditworthiness up. So, borrowing one loan from one formal lender removes all that hassle. You will know who you owe, how much money to, and when. This reduces the possibility of default and helps you build your credit score at the same time.
At CreditEnable, our goal is to help our SME borrowers access affordable business financing in no time to fund their business growth while keeping their credit scores up. That is why we partner with over 25 leading lenders in India who offer over 100 business loans specialized to meet the needs of SMEs.
When you apply for a business loan using our technology platform, our 100% digital and hassle-free loan process makes it easier and quicker for you to apply for the business loan best suited for your business needs.
Business Loans. Enabled Simply.