10 Business Loan Benefits You Need to Know

As businesses evolve, so do their expansion plans. It’s the very nature of a business. Here, finances play an imperative role in expanding operations. But how much can you pour using your own finances? There’s eventually a limit to it.

This is where a business loan acts as a perfect financial tool to fuel a business's growth plans or help finance its operations – backed with significant advantages. In this blog, we highlight the 10 business loan benefits that may turn the table around.

1. No collateral

   In most cases, businesses can get a business loan that requires no collateral, meaning you are not required to pledge any business assets such as property, equipment, or inventory as security against the loan. It particularly benefits startups and small business owners with minimal physical assets.

2. Minimal documentation

   A business loan doesn’t need cumbersome paperwork; you can complete the loan application process quickly online, saving valuable time and effort. This is especially valuable to small businesses who might view taking a business loan as a complicated process.

3. Multiple loan options

   One of the benefits of taking a business loan is the wide array of loan options available to business or startup owners. Depending on your business needs and goals, you can select from various types of business loans, such as a term loan, working capital loan, cash credit, and more.

4. Competitive interest rates

   As a business owner with a strong credit score, you are more likely to secure a lower interest rate. However, the rate at which you qualify depends on factors such as the type of business loan, the amount borrowed, and your business’s financial stability. In general, a strong financial profile improves your chances of getting a favourable business loan interest rate.

5. Tax benefits

   As per the Income Tax Act of 1961, under Section 80C, any interest paid on a business loan qualifies as a deductible business expense. The said deduction reduces your total taxable business income, thereby lowering your tax liability. Even though the business loan is a liability, the associated interest provides a tax benefit through this deduction.

6. Working capital management

   A business loan can facilitate your business’s day-to-day operations and ensure sufficient cash flow to cover payroll, inventory, supplier payments, and other expenses. This improved liquidity drives your business's overall success without any constraints from cash flow shortages.

7. Instant disbursal

   Digital lending platforms offer quick loan disbursals as one of the premier benefits of taking out a business loan. Once your loan is approved, the agreed loan amount will be deposited in your bank account within 24 to 48 hours. This instant access to money helps you manage cash flows and promptly address urgent financial needs.

8. Use for any business purpose

   Lenders follow the norm – no questions asked. You can use the business loan amount for any business-related purpose that supports your business needs. Whether you need to invest in new equipment, expand operations, improve marketing efforts, or manage unexpected expenses.

9. Flexible repayment tenure

   A business loan allows for a flexible repayment schedule matching your cash flow pattern and business cycle. For instance, a seasonal business may prefer a longer repayment tenure to ensure sufficient funds during off-peak periods. By having the option to extend or shorten the loan term based on your evolving financial situation.

10. Building credit score

    When you make timely repayments on your business loans, financial institutions report this information to credit bureaus, which can help improve your business’s credit score. A strong credit score is necessary for securing future loans and financing options, so taking out a business loan and making consistent repayments can lead to more favourable terms and lower interest rates.

By now, as you know the business loan benefits, you can utilise it as a powerful tool to grow and finance your operations – necessary to take your business to new heights.

With Quid, the process has become simpler than ever – eliminating the need for bank visits and connecting you directly with lenders, matching the right business loan that will empower your business.