The step of business growth is very crucial for the business owner. Any mistake can hamper business operations.
A business loan can help every small business owner overcome any obstacles that come along the way of business growth due to the lack of finances. Many lenders offer loans for businesses but all lenders have their own eligibility criteria.
Business loans are offered by banks, NBFCs, and other schemes that are provided by the government for businesses.
Before taking the step of business growth, every business owner should consider the following:
1. Consider the location of the business
Consider the location of the business. Study the competitors first, and then choose a location where there can be some potential customers.
2. Analyze the machinery/equipment and employees used in the business
Access the machinery, and equipment whether they are working properly or no. If there is a requirement to repair or buy new machinery/equipment.
Also, analyze your employees. Do you need to hire more or your current employees will support during expansion?
3. Conduct a research
Conduct research on your competition to know what they offer and what different can you offer to your customers which your competitors do not.
Analyze whether there is a need to have a new set of the target audience and work towards making an attractive marketing campaign.
4. Know if there is any funding required for the business
Decide whether any funding is really required for the business. Look into the various funding options available and decide on the one which suits your requirements.
Choose from a loan with security or without security and see whether you will be able to repay on time.
5. Do a SWOT
Make a note of all the strengths, weaknesses, opportunities, and threats to your business. This is important before you go ahead with the growth plan. This will help in knowing where the business stands right now.
When you consider growing your business, it can be done without taking funds or with the help of funds. Every business owner finds taking a loan critical, especially during this step. But taking a business loan at the right time can help a business a lot.
Types of loans available for a business owner:
1. Loans from bank
Banks provide secured loans to businesses, i.e. they include an asset which has to be given as security. This asset can only be received back after the entire loan amount including the interest has been paid to the bank.
In case there is a late payment or no payment from the borrower’s side, then the lender can take the ownership of that asset.
These loans are better if you want to lower the interest rates and have a longer loan tenure.
2. Government schemes for small business owners
Some government schemes like the Mudra Yojana scheme, and the Stand-Up India scheme can be used by small business owners to avail business loans.
The Mudra Yojana scheme offers loans up to 10 lakhs to micro/small businesses.
The Stand-up scheme can be used by women entrepreneurs to avail a loan for their business.
A loan starting from Rs. 10 lakh till Rs. 1 crore can be availed through this scheme.
3. Unsecured loans form NBFCs
NBFCs are also an option to avail a business loan. NBFCs or Non-Banking Financial Company offer unsecured loans to businesses and have a simple application process, mostly online.
If you go for banks, the loan application process takes a long time, there are rules and regulations, and certain terms and conditions to follow. Bank loans also involve collateral as mentioned above. All this is not the case in case of NBFCs.
The applicant just has to visit the site, fill the application, upload the required documents, meet the eligibility of the lender, and have a good credit score.
Here are some areas where getting a business loan can help in business growth:
1. Hiring experienced professionals
Hiring experienced professionals for your business can help during business expansion. The skills these professionals have can be a lot of help in making the tasks more easier and organized.
But this would require capital which can be obtained by taking a business loan.
2. Updating inventory
Up to date inventory is very important for the functioning of the business. It helps in normal tasks and also at the time when there is a bigger order.
This could involve repairing or buying new machinery or inventory so that the business processes do not suffer. The best option to go for during this time is a machinery loan.
3. To maintain a proper cash flow
Maintaining proper cash flow is very important for a business. And when there is business expansion, there would be a need to pay to the vendors, and suppliers, etc. Client receivables can get delayed which will lead to a credit issue. Therefore, taking a business loan can help overcome these problems by maintaining healthy cash flow.
4. For marketing activities
Marketing business products and services in a budget require planning and a proper team. A business loan can help with the marketing activities, a small business owner will carry out to promote the business.
5. Working capital
Working capital includes everyday business tasks like paying rent, electricity, wages, handle accounts payable, etc. It is important for every business that these tasks are completed on a daily basis.
A working capital loan can be taken so that all these day-to-day business activities are not affected. A working capital loan can also help in ensuring that there is proper cash flow.
If you are planning to grow your business, here are certain tips you can follow:
- Ask customers for their feedback to know what more they want from your business. In this way, you can understand the demands of the custoemrs and what you can do for this.
- Use social media and some informative videos to make the customers aware of the products your offer. You can also give some discounts or free giveaways.
- Work with other businesses so that your products and services get promoted more and more which can, on the other hand, bring more profits to both the businesses.
If you want a loan to grow your business, you can contact Gromor Finance for unsecured loans at affordable interest rates!