Business Funding: The Benefits
The Benefits for New and/or Established Businesses to Get a Loan to Help Them Start or Expand Their Business
Companies require funding at different phases such as to start a new project or expand operations. However, seeking funding is not an easy task, especially when your organization is new and does not have a solid history of paying off debt. New and established business owners have to find out a way to obtain financing in order to keep afloat. One of the best options that you should consider is taking out a loan. To help you realize why a business loan is all you need, here are some of its benefits that you need to know about.
A major benefit of a small business loan is that it offers flexibility. There are different types of loans for small businesses that you can choose from. It is important that you take complete advantage of the flexibility and evaluate all your options. You should be able to seek a loan for just about everything, from launching a new product or service to expanding into a new market. Other funding options do not offer such a high level of flexibility. Hence, you can rely on small business loans for startups or expansion.
2. Convenient Repayment Terms
Another great thing about new business loans is that they provide convenient repayment terms. The flexibility offered by the loans is reflected in the repayment options. Banks and lenders provide flexibility when it comes to repayment because they know that there are complexities involved. Hence, you can discuss with them to ensure that the perfect repayment plan is designed. You might even be able to negotiate a repayment plan that is based on cash flow for ensuring that you do not experience any difficulty in financial management.
Moreover, the borrowers might decrease or increase the EMI (Equated Monthly Installment) based on the financial condition of your business. In fact, you could even opt for bullet payments to make sure that you are able to repay the loan periodically. It will make things a whole lot easier for you. Knowing that the repayment terms are flexible will take the stress away and allow you to focus on running your business.
3. Low Interest Rate
A great thing about seeking a small business loan is that it is available at a low interest rate. This means that you can get funding without having to spend a lot of money. You can expect to find small business loans for startups that do not levy a double-digit interest rate. Besides, the government has also encouraged lenders to offer loans in the form of subsidies. It is worth keeping in mind that the interest rate is not always determined by the loan amount.
There are various factors that you should consider such as the borrower, your company’s financial position, the viability of your business model, and the tenure of the loan. As for other costs that you would need to pay, chances are that you would only need to pay a processing fee which would be a one-time expense. Hence, you do not need to worry about spending a lot of money on getting a loan for running your business.
4. Easy Availability
Small business loans for startups are easily available. Unlike what you might be misled into believing, getting a loan is not impossible. In fact, it is even possible to get new business loans without any collateral. This is why you have to utilize the option for your startup. You should be able to use the EMI calculator that is available on the lender’s website for easy processing. Besides, you should be able to seek assistance with the process. Hence, your chances of getting funding are higher than you think.
5. Grow Your Business
If there is one benefit of loans for small businesses, it is none other than their ability to help you grow your business. Although technology and manpower are essential for expansion, you need finance to make sure that you are able to cover all the costs involved. It is necessary for just about everything. The cash inflow from the loan will allow you to expand your business and make the required purchases. Most loans provide flexibility over how you utilize them. As long as you use the money for your business, you should have nothing to stress about.
6. Tax Benefit
When you take out a small business loan, you get to benefit from a tax benefit. The Income Tax Act allows you to claim deductions or tax credit on the interest rate paid. It is important that you discuss with your accountant or lawyer to learn more about the tax benefit. Since you can claim a tax credit or deduction, it makes sense to seek a loan. You will find it to be just what you need. As the law is in your favor, there is no better decision that you can make than to take out a loan.
Now, you might think that business taxes are expensive. However, you have to pay all your taxes before the deadline. Otherwise, your company’s financial health would be compromised. In fact, it could take a toll on its future. Since interest is tax-deductible, taking out a small business loan is a great idea. Besides, you could opt for a fixed-rate option to ensure that you have no trouble budgeting the expense.
7. Establish a Relationship with the Lender
Another reason to consider taking out a small business loan is that it enables you to establish a relationship with your lender. The importance of having a strong relationship with a lender cannot be stressed enough. It makes it a whole lot easier to seek financing later on, especially if you manage to repay the initial loan amount.
Since you are likely to require funding at every stage, you need to focus on building a relationship with your lender. It will open doors for you and allow you to sit back and relax. Having a lender whom you can reach out to will make everything much easier for you. It would ensure that you are able to seek financing whenever you require it.
8. Solve Cash Flow Problems
Cash flow issues are more common than you think. This is why you need a small business loan to keep your operations going. If your cash flow tends to be inconsistent or sporadic, you could truly benefit from a loan. It will inject money into your organization to ensure that you are able to pay for expenses and benefit from early payment discounts. Besides, maintaining a positive cash flow is vital for handling financial challenges. Nothing is more important than having a steady flow of cash.
9. Cover Emergency Expenses
No matter how careful you are when it comes to running your business, there come times when you need to be able to pay for emergency expenses. Borrowing money allows you to make it through difficult times. Ever since the coronavirus pandemic broke, only businesses that had additional working capital were able to survive. This is why you need to get a loan for your company.
Besides, emergencies are bound to arise from time to time. For instance, if the central cooling/heating system breaks down, you will have to spend on costly replacement or repair. Thus, your best option would be a small business loan for covering the emergency expenses.
10. Sustain the Business When Business Is Slow
Anyone running a seasonal business requires a business loan from time to time. It will prove beneficial when things are slow. You can utilize the financing to cover marketing expenses, inventory costs, equipment upgrades, and wages. It is important that you seek out a lender early on to keep your company afloat.
11. Build Business Credit
Generally, a strong business credit score is necessary for getting approved for different types of financing options. Whether your business is new or old, you have to focus on building your credit score. A great way to do this is by seeking a small business loan and paying it off. By making payments regularly, you can boost your score in no time.
12. Purchase Inventory and Equipment
There will come times when you simply are unable to purchase inventory and equipment. It is during times like these that you need a small business loan. Since inventory and equipment tend to be expensive, you need a loan to cover their cost. Similarly, you might need to upgrade the equipment that you already have as it might be outdated. Moreover, you need to get funding to purchase new inventory for your business.
Obtain a Small Business Loan
Now that you know the many benefits of seeking a small business loan, you just need to apply for one with Clean Sweep Financial. We help both new and established businesses by allowing them to get a loan with a credit score of just 680 and 2 years of tax returns. Our one-page application makes it possible to get pre-approved within minutes. The best part is that our loans are available for up to 7 years. We can approve a business loan of $50,000 to $500,000 and offer same-day approval for business funding.
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