The top 5 reasons companies apply for a business loan
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The top 5 reasons companies apply for a business loan

  • Highlights

  • Reasons to apply for a business loan

  • How business loans fuel working capital

  • How a business loan can help you restructure debt

  • How a business loan is a convenient source of finance



There are various reasons companies require finance, though upgrading necessary machinery and improving cash flow are some of the most popular reasons. Here are some common reasons companies apply for a business loan:

To fuel working capital

Some lenders offer a business loan featuring a convenient Flexi loan facility to finance your working capital when payments are delayed and your working capital cycle has increased. Also called a Flexi Business Loan, this option offers you funds via a loan limit, and allows you to borrow multiple times from the loan limit as and when you need the funds. You only have to pay interest on the amount utilised and not on the entire amount extended to you

This facility is extremely beneficial to fund your working capital needs, as these can vary from month to month. Since you don’t have to make multiple loan applications, it is a good way to meet unpredictable expenses like paying a supplier more for increased raw materials when demand is high. Alternatively, if you can predict the requisite amount of working capital your business needs, you could also take a specialised working capital, which gives you a fixed amount for a fixed repayment tenor.

Additional Read: The Life Cycle Of Working Capital Explained

For acquisition of assets

An architecture partnership could need to purchase various assets over time like drafting machines and auto CAD software, new office premise orcompany vehicles. These assets add value to an architect’s business operations, but can be expensive. This is where a business loan can help. Your business can lease or buy specialised machinery by taking a customised machinery loan, and increase your firm’s productivity.

Additional Read: How to Prepare Your Organisation for a Business Loan

To restructure debts

Repayment of debt helps prevent your firm from having financial problems in the long run. For example, an architecture partnership could have acquired a range of debts to fuel different design and construction projects. These could have varying rates of interest and different payment schedules that are not only expensive but also hard to keep track of. In such a case, the firm could use a business loan that has nominal rates of interest to affordably repay the debt.

How To Get Small Business Finance From Bajaj Finserv

Dos and Don’ts when applying for a Business Loan

Business loans from Bajaj Finserv are designed specially to help growing businesses meet their financial requirements. Easy to apply for and hassle-free to avail, these loans come with several unique benefits that make them the ideal mode of business finance for small and medium sized enterprises. However, when applying for a business loan, there are certain dos and don’ts that you should keep in mind, in order to ensure that your application is processed smoothly. Here, we tell you what they are.

Dos and Don’ts when applying for a Business Loan

When launching a new product or diversifying

A new launch or entering a new market requires sufficient finances for both research and execution. Consider the example of a malted milk manufacturer looking to launch a new product. His firm required funds to finance research into consumer preferences with regard to flavours, market research for price points, as well as employa team of chemists and nutritionists to create a new malt beverage. He can thus take a convenient business loan with a flexible tenor to finance these activities.

Additional Read: How to Apply for Business Loan

When funding a new marketing campaign

A new marketing campaign would require you to spend on various costs like hiring strategists, creative copywriters,and graphic designers. It could also require funds for executing promotional strategies like sales displays. If these funds are not readily available, your firm can use a Flexi Business Loan to finance unpredictable marketing expenses with ease.

Why a business loan is a convenient source of finance for companies

Borrowing a business loan is a convenient option because of its flexibility and affordability. It offers various benefits like no need of collateral, quick disbursement directly to your bank account, easy prepayment options, pre-approved offers and much more.


 

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