2 min read
25 May 2021

Pritpal Singh, owner of a mid-sized sports goods manufacturing company in Ludhiana, was in an expansion mode. While his project was in full swing, he realised the cash he had will run out soon, thereby risking his venture. Financial prudence led him to opt for a business Flexi loan facility.

Pritpal's case highlights an essential business philosophy. In times of growth and uneven cash flow, businesses must be flexible enough to adapt to change. A Flexi loan facility should be on the radar of a business owner when in need of ready access to cash. Let's see the various benefits offered by Flexi business loans.

Short-term funding

This mode of finance is the best bet for short-term funding to solve a liquidity crunch. Businesses can use this for meeting various needs like upgrading machinery, replenishing inventories and training, among others. Seasonal businesses like agriculture can use this source of finance for hiring labour and machinery at the peak season. We, at Bajaj Finserv, offer an MSME/ SME business loan up to Rs. 80 lakh with a Flexi loan facility.

A continuous source of finance

Flexi business loans are subject to review and annual renewal. In most cases, the EMIs consist only of the interest component. This brings down EMIs and results in savings. Moreover, businesses need to pay interest only on the amount used.

Borrowers can deposit the funds when in excess and withdraw the same when required. The limit may either drop or remain constant throughout the tenor, giving maximum availability of funds. Thus, it acts as a continuous source of finance.

Flexibility of purpose

Flexi business loans address a wide range of financing needs. While Pritpal used such a loan to fund expansion, businesses often use them to:

  1. Buy new equipment
  2. Train employees on new technology
  3. Install new software

The flexibility of purpose helps in better management of cash flow and channel funds where it’s required the most.

No need for collateral

Offering a collateral during cash shortage can be a dilemma for businesses. However, Flexi business loans are an unsecured source of finance where there isn't the need for any collateral. Most businesses in India, particularly small ones, are asset-light. They have very little to offer in terms of collateral for loans. In such a scenario, Flexi business loans are the most prudent financial choice.

Bajaj Finserv's business loans don't require any collateral, which means business owners don't have to put their personal or business assets on the line. Funding is faster, easier and requires less paperwork.

Competitive business loan interest rate

Flexi business loans are available at a competitive interest rate. A competitive interest rate coupled with the option to pay only the interest component on EMIs helps organisations save funds. The savings boost working capital to a great extent.

Building up credit score

Rational handling of the loan limit in Flexi business loans improves credit score.
Improving the credit score helps business owners access bigger and larger financing resources later. In the loan market, credit score reflects the trustworthiness of the borrower. Credit score may affect the loan amount and rate of interest. In a dynamic environment, running a business is a challenge. Depending on the need, a Flexi loan facility is ideal to overcome liquidity crunch for smooth operations.

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