BENEFITS OF BUSINESS LOANS
BENEFITS OF BUSINESS LOANS
Benefits of Business Loans
There are numerous reasons as to why an individual or firm will need to borrow money. Some borrow because they want to add to their present investment, others borrow because they need to revive their trade, and also, a company might borrow in its bid to improve operation and see off competition. Whether we like it or not, loans are essential part of business that we can hardly do without, even big companies or wealthy businessmen/women have to borrow in some instances to solve business-related issues and continue operations. There is need to understand the numerous benefits attached to business loans.
Increase Working Capital
A major advantage of borrowing especially for very big firms is that it improves their working capital. These companies that are working towards expanding already have enough capital to become larger, but taking out a loan permits them to stabilize their operating cash flow, which makes it easier for them to cover any unexpected expenses along transaction lines. With this, they are equally able to make payments on their loan through the new income gained from expanding their business. It is an advantage for these kind of firms as they will surely thrive better than lesser companies.
Business loans can equally be used to boost revenues or gain competitive edge in business lines. It is not a bad idea if a company plans towards opening a new branch, launching a marketing campaign, adding to its inventory for seasonal demand spikes, and more. Provided the use of capital is properly channeled, any money is good money especially when business is concerned. An individual or company can go for short- or long-term loans depending on whichever one works well or is appropriate for the kind of business involved. The general idea attached to borrowing is that the capital generated are channeled towards repayment of the loans secured, and leaves a fine sum to add to business operation or personal use. This allows you hit your business financial target without having to involve your personal cash.
Convenient and Accessible
Another major benefit of business loan is that they are very convenient and easy to access. For instance, businessmen/women find it easy to get bank loans especially when they meet requirements for these loans. Owing to the fact that banks operate on a daily basis, they are used for daily savings deposit and withdrawal. By the virtue of being a bank’s customer for years, the bank is open and customer-friendly to you and would not hesitate for one bit to give you a business loan. Your business is sure of a ready loan source when it is confronted by financial challenges. Needless to say, banks present multiple loan options for businessmen, leaving you with the choice to select the one easier and suitable for you and your venture. Further, small businesses that secure loans from banks enjoy the benefit of tax relief because percentage of profits gained by the bank after repayment are used to pay tax on behalf of the customer.
Less Risk for Corporate Entities
For corporate entities that borrow loan, the business owner usually does not have to repay if the company fails. If the venture turns out to be a failure, liquidating the business becomes the best option which helps payback part if not all of the funds borrowed, leaving the business owner with nothing to worry about. Many corporate business owners bare this in mind while seeking for loans because they know that only the corporation will go bankrupt in the event of failure, their personal income and properties does not get affected. These kind of loan permits the owner less pressure which in most cases lead to the success of the purpose of borrowing such loan. It is rare for a corporate entity to fail to repay loans.
Low Interest Rate
Most business loans in recent times comes with low interest rate. Banks in recently hit recession Nigeria offer loans at unbelievable low interest rates. This is owing to the fact that most of these banks are currently facing liquidation as a resultant effect of recession, and in a bid to counter this problem, most of them are increasing the rate at which they offer loans so they can generate capital from interests in these loans to serve as compensation.
Many businesses working towards expansion use this opportunity to collect loan from banks and invest further for more income. This kind of economic situation leaves business owners at a great advantage. First, they just have to pay low interest on these loans, secondly, they stand a bigger chance of expanding their trade. It is also important to remember that expansion equally comes with big business gains. A loan secured in this present economic trend will have much lower overhead compared to the one taken in two years’ time when most of these financial institutions must have properly settled and found their economic footing.
Simple and Speedy
Presently, numerous FinTech companies are catering to a large demand for business with particular focus on startups and small and medium enterprises (SMEs). Owing to the support and backing received from government, there are massive loans available for funding new business ideas or even expansion. In a digitalized world, online lending platforms seize the opportunity presented to tap the business market by providing loans which benefits the borrower as well as the lender, it is a win-win relationship. Most of these loans comes with friendly, simple, and hassle-free terms and the process of securing them is speedy. Branch International is a perfect example of such lending platform. All the lender needs to do is to create an account with them by registering on their mobile app, fill the required columns and you are sure to get access to their loan in the space of 24 hours. Other example of such money lending platforms includes RenMoney and FairMoney. Technology has made the world a bit easier, and we cannot fail to channel the benefits attached to the advent of technology into our daily businesses for better services.
Patriarch Business Advisory (PBA) aka Patriarch Advisory (PA) is a management consulting firm committed to bridging the knowledge, finance and mentoring gap of small and medium sized enterprises in Nigeria. We provide excellent bespoke services that are extremely useful to any business. Among others, our services include business financing, marketing strategies, growth and expansion plan, and objective business diagnosis. Some our deliverables include Business Plan, PitchDesk, Grant and Loan Application, Proposals, Concept Note and so on. Please contact us today to discuss your specific concerns. The excellence we put to our work stands us out.
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