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Business Loan: What it is & Why it is Crucial for Business Owners
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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You’ve probably heard the saying “you have to spend money to make money,” and it’s true. If you want your company to grow, you should be able to invest in things like equipment, advertising, and real estate. The trouble is that managing all of those fees on top of the costs of running your business may be difficult, and paying for your firm’s demands upfront is generally unfeasible until your company grows. It’s a vicious circle.
You can’t expand until you invest, but how can you invest while maintaining money in the bank for operational expenses? A new business loan could be the answer. While going into debt might be intimidating for small business owners, a loan can help you fund changes in your company that will yield a good return on your investment and secure your company’s future.
What is a Business Loan?
A business loan is an unsecured credit that you might use to address the urgent needs of your developing company. Business loans enable you to raise finances for your company to extend your current operations, increase production, go online, purchase new machinery, and more. Business finance provides you with a speedy infusion of cash, allowing you to make important purchases and payments on time.
Why is a Business Loan important?
Here are three reasons business loans can be crucial for business owners -
1. Expansion
Reinvesting or ploughing back your profits is one strategy to develop your firm. This is a fantastic strategy to grow, but it is slow and takes a long time. After all, you’d only have so much money to reinvest in your firm to scale it. In such instances, an online business loan might help scale your company quickly. When business is growing, continuing to expand your company might assist in keeping revenues from plateauing or shrinking. Online business loans can help you cover the increasing costs of your business without depleting your operating funds, allowing you to keep impressing customers while expanding.
2. Buying Inventory
Inventory is one of the most significant and difficult-to-manage expenses in many industries. The issue is that you must invest in the things you intend to sell before your customers can purchase them and balance the expense. Once you’re up and running, you’ll need to continuously expand and replenish your inventory to stay up with demand and provide your consumers with more options. When your firm has seasonal goods, such as winter clothing, this expense becomes even more difficult.
You can remain ahead of trends and meet client demands without affecting your cash flow by taking an SME business loan to cover inventory expenditures.
3. Maintaining Cash Flow
Cash flow is always a concern for a small business, and it can get even worse when you have clients who don’t pay for services or unsold inventory that needs to be relocated to make room for new products. When you throw in the normal costs of your goods, staff, utilities, and rent or mortgage, these difficulties become even more challenging. A new business loan might help your firm stay afloat when profits are down. Maintaining a steady flow of cash allows you to attract new customers and generate income while compensating for other losses.
Conclusion
Dreams don’t just come true; sometimes, we all need a little financial push. An SME business loan is exactly that. While applying for a business loan, you must check the eligibility criteria. You can get a business loan from Kotak Mahindra Bank ranging from Rs. 3 lakhs to Rs. 75 lakhs for small, medium or large businesses, that too without any collateral, with hassle-free processes and flexible repayment options.
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