In the world of business financing, flexibility is a key factor that can make a significant difference in managing cash flow and achieving growth targets. Traditional personal loans often come with fixed EMIs (equated monthly installments) that do not adapt to the varying financial needs of borrowers. However, innovative financial solutions have emerged to address this limitation, offering business owners greater control over their loan repayments. Among these solutions, Flexi Hybrid business loans have garnered popularity for their unique features that allow borrowers to optimise their EMI repayments based on their financial situations. In this article, we will explore the benefits of Flexi Hybrid business loans and how they can positively impact businesses.
The conventional EMI system:
In a regular personal loan, the EMI remains constant over the loan tenure. The EMI is calculated by dividing the principal and interest (over the loan period) by the number of months. This fixed structure offers little room for borrowers to adjust their repayments in response to their financial fluctuations.
The emergence of Flexi Hybrid business loans:
Recognising the need for financial flexibility, lenders have introduced two new loan variants - Flexi Term Loan and Flexi Hybrid Loan. These loan products have been designed to let business owners with the flexibility to adjust their EMIs based on their cash flow requirements.
1. Flexi Hybrid Loan - optimal financial control:
The Flexi Hybrid Loan offers borrowers a unique approach to loan repayment. In the initial period, borrowers are required to pay only the interest component as EMIs. Consequently, the EMI burden is considerably lower during the initial phase of the loan. For example, let us consider a scenario where a business owner takes a Flexi Hybrid Loan of Rs. 10 lakh for two years. During the initial six months, the borrower will only need to pay the interest component as EMIs, allowing them to manage their cash flow more efficiently.
Moreover, borrowers have the option to make part-prepayments without incurring any charges, allowing them to reduce their outstanding principal amount and further lower their EMIs. For instance, after six months, the borrower decides to part-prepay Rs. 2 lakh. This will reduce the principal amount to Rs. 8 lakh, resulting in lower EMIs for the remaining tenure.
Additionally, borrowers can withdraw any prepaid amount in case of future financial needs, providing them with optimal financial control. For example, if the borrower faces a temporary liquidity crunch after making a part-prepayment, they can withdraw the prepaid amount to meet immediate business expenses.
2. Flexi Term Loan - A balancing Act:
In addition to the Flexi Hybrid Loan, borrowers can also opt for the Flexi Term Loan. This loan variant operates like a regular term loan but offers the added advantage of multiple part-prepayments or withdrawals from the sanctioned loan amount. This enables borrowers to strike a balance between reduced EMIs and managing unforeseen financial contingencies efficiently. For instance, a business owner may choose the Flexi Term Loan for a loan amount of Rs. 15 lakh. After one year, they can make a part-prepayment of Rs. 5 lakh to reduce their EMIs for the remaining tenure.
Online convenience with multiple variants:
With three flexible variants - term loan, Flexi Hybrid Loan, and Flexi Term Loan - available, business owners can choose the one that aligns best with their financial requirements. The online application process further simplifies the process, enabling borrowers to complete their applications in just a few minutes. In most cases, the loan amount is disbursed within 24 hours* of approval, offering quick financial support to meet immediate business needs.
Cautionary considerations:
While lower interest rates may seem to appeal, it is essential for borrowers to make detailed calculations to avoid potential financial pitfalls. Evaluating the overall cost of the loan, including the total interest paid, is vital in making an informed borrowing decision. You can use the business loan EMI calculator to make better decisions.
Flexi Hybrid business loans provide business owners with the financial flexibility that they need to navigate the ever-changing landscape of business operations. Embracing these innovative loan variants can help businesses optimise their cash flow, reduce financial stress, and achieve their growth objectives with ease. Whether you are an aspiring entrepreneur or an established business owner, consider the benefits of Flexi Hybrid business loans to allow your business with financial flexibility. Apply for a Flexi Hybrid business Loan today and embrace a more efficient and adaptable approach to managing your business finances.
