Small manufacturers can avail a small business loan for reasons like a business expansion. Most of the small manufacturers face an issue of getting their loan approved. A small manufacturer can explore other options like government grants or take a loan from a financial institution other than a bank like an NBFC.
Here are some ways a business loan can be effectively used by a small manufacturer:
Can take a machinery loan to buy equipment
Purchasing is a better option than taking a piece of equipment on a lease because the cost of maintenance on leased equipment is usually high. The business loan can be used to buy equipment or machinery to get a tax rebate in the first year of your business. The value of the equipment will decrease over a period of time and can then be sold at resale value.
You can contact banks or NBFCs for machinery loans after checking the eligibility criteria.
Can take a business loan to purchase inventory
In a manufacturing business, there might be a need to take a business loan for buying inventory.
Chances are that banks will not accept loan request for inventory. In such a case, it is better to contact any peer-to-peer company (lending money to businesses through online services) or an NBFC. You can pay the lender using the amount received after the sales. These companies usually have high interest rates so the loan amount has to be paid in time.
Can take a working capital loan to meet the working capital requirements
Working capital is required to run the regular activities and operations of a business. A working capital loan can be taken to meet the financial requirements of the business to keep the business running smoothly. Various banks offer working capital loans, but contacting an NBFC can be a better option.
Can take a loan for business expansion
A business loan can be taken to expand your business operations like introducing opening branches operations at other locations, introducing a new product line and services.
Can take a loan to set up factory or office
Banks can be contacted for a loan with security to set up a new office or factory. The main criteria for this are that your business should be functioning smoothly.
This will also help in creating a good credit history which can be used to negotiate payment terms with the vendors.
The business loan can also be used to hire new and experienced employees or experts from the industry.
If you want to take an unsecured loan for your business, contact Gromor Finance for loans up to 10 lakh at affordable interest rates!