Benefits of NBFC Business Loans

Published on: 07 September 2018 Last Updated on: 22 July 2024

Being a small-business owner, you have been putting your whole-hearted efforts to make your business venture a success. You have been working long hours, traveling for client meetings to different cities, staying away from home for days on stretch and also investing all your personal savings and assets to take your business to new heights. Now that you have put your business on the path to growth, it suddenly dawns on you that you have not been able to pay adequate attention to your financials. Now when there is a significant opportunity in front of you in the form of a brilliant idea, which will change the future course of your business, you find that you do not have necessary funds to put that into practice. You feel anguished and frustrated, but that is not going to serve any purpose. So rather than ruing your ill-luck, its better you start looking at other options that you must explore, to meet your financial requirements. One of the most obvious options is availing an Unsecured Small Business Loan.

What is an Unsecured Small Business Loan?

Business Loans that are available to small business owners for their desired purpose without any requirement of collateral are called Unsecured Small Business Loans. These loans are extended by all financial institutions in India, private sector as well as public sector. You are free to utilize the loan amount for any purpose you may deem suitable including the purchase of machinery, upgradation of infrastructure, renovation of office premises etc. There are two types of unsecured business loans in the market NBFC business loans and Bank business loans. The repayment of these loans is to be made in monthly EMIs.

Advantages of Small Business Loans

Small business loans offer a flexible source of funding for you to meet your urgent financial requirements. There are various advantages provided by small business loans such as: –

No dilution in ownership :

When you take a small business loan from a financial institution, you need not provide any collateral and are free to utilize the money in any way you want for your business purpose. The lender does not have anything to do with the way you have spent the money, as long as you repay your EMIs on time. This ensures that the ownership of business stays with you and is not diluted. This is a better option compared to other sources as venture capital or personal borrowing, where you must give up a part of your ownership of your business in lieu of money.

Taxation Benefits :

Small business loans are to be repaid in monthly installments, which comprise principal component and interest component. The interest that you pay on loan is allowed as an expense, and you can claim tax benefits against the same. This, in turn, reduces your tax burden, and the loan in effect costs less in practicality. No other source of funding offers this option.

No Collateral required :

If you do not have any collateral to be hypothecated with the financial institution, then unsecured business loans are your only option. This is an ideal situation for new businesses or start-ups who have a great idea but do not have any collateral to be mortgaged. If required by the lender, you can get a guarantor on board.

Lower Interest Rates :

Unsecured small business loans have a more moderate rate of interest as compared to various other sources of finance such as credit cards or private money lenders. Lower interest rates mean lower EMIs which translate into a lesser burden on your finances. In some cases, the government also offers subsidies on unsecured business loans to help small business owners have easy access to credit at lower interest rates.

No stress on working capital :

When you are able to avail an unsecured business loan, you get spare money at your disposal, which can help you in getting better deals from your suppliers and vendors. Moreover, this ensures that you need not withdraw money from your working capital and thus you can meet your daily expenses conveniently. Also, as the EMIs are to be paid on a monthly basis only, you do not have to put pressure on your cash cycle by withdrawing huge sums together.

Flexibility in Repayment :

some NBFC business loans come with the option for EMI holiday or flexible repayment options, where you only need to pay interest on the loan as your EMI for a specified period, in the beginning, this way your EMI payments, in the beginning, is reduced and you get time to manage your financial position. The principal amount for this mortarium period is adjusted over the remaining period of the loan.

Unsecured small business loans offer a lot of benefits for you. But you must conduct proper research and analysis before you take a final decision regarding the loan.

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What Are the Alternatives for Small Business Startup Loans?

An investment can yield fruits or fail. There are so many risks involved when starting businesses and investors will always wish for the best. Small business startup loans are essential for your business to grow smoothly. However, where there is a less risky option, no one would hesitate to consider it. This is especially the case when it comes to financing startups. Small business investors may be reluctant to review the loan options for good reasons. For example, a loan is an obligation that has to be obeyed. If the investment does not yield profits, the owner must repay using other alternatives. In many cases, these loans have very high interest rates, and the total cost of borrowing may be too expensive for small investors. It is imperative to reduce the risks involved in borrowing funds, especially for startups. You come to think of the adverse effects a loan may have on your financial profile, and it becomes necessary to consider alternative options for financing your venture. Let us examine the scenario portrayed earlier. If the investment fails to be successful, it means the business cannot repay the loan. If you do not have alternative ways of settling the debt, you will default. As a result, your credit score will be negatively affected, and this reduces the chances of securing other loans in the future. Suppose you do not default but repay late, your credit history will still be damaged. Because of all these risks, it is important to consider alternatives for small business startup loans. Alternatives for Small Business Startup Loans: Alternative small business loans are more flexible with good credit requirements. Statistics show many small businesses are turning to alternative financing. As a business person, you will be confronted by situations that demand instant funding. Even though bank loans are perceived as the best solution in such cases, the truth is banks are often unwilling to offer loans to startups. That is why many are checking legit online loans like Instant Loan for fast-approval financial loans. Still, your venture might not meet the conditions required by banks, and if you are not careful, you may not salvage your business situation. You can turn to your retirement funds, dispose of a personal asset, or use your credit cards. Develop proper plans that can work well in your favor. While these options may help, several alternative funding options salvage the conditions in the best way ever. The following are some of the best alternative options for startups: Asset-based lending: In this arrangement, the asset you intend to purchase is held as collateral for the funds borrowed. Put differently; the lender becomes the owner of the asset until you repay the final payment. The two standard options in this category of financing include leasing and hire purchase. Business Angels: These are very wealthy and experienced individuals in the community who are often willing to invest in new businesses. They usually have prior understanding of how the industry operates and this is a significant factor in their decisions to invest in new ventures. The main problem with this type of financing is matching investors with small business owners seeking finances. The only ways the two can connect is through friends, family members, and business networks. The best thing with business angels is that they never seek control or management positions in the firm. They only perform advisory roles, and it is expected that they are consulted. Venture capitalists: If the risks involved are too high, the best alternative financing option is venture capital. It is always perceived as early phase sponsoring of new and young firms with the potential of growing quickly. Unlike business angels, venture capitalists are supposed to be involved in the management of the business. They always take some shares in the business. Their primary interest, though, is on the business growth and would be glad to see new small firms grow and become large. Nevertheless, venture capitalists do not finance all small businesses. They have criteria for determining which firm to fund. The following are some of the things they look for in a business before funding it: The quality of management Efficient corporate management Suitable investment structured. Venture capital can be the best way of financing startups. However, it comes at a cost because new investments always have high risks. If you do not want to lose part of your independence or shares in the business, then do not consider this option. Venture capitalists always aim at harvesting long-term financial gains. They may opt to harvest after a period of 5-10 years after making the original investment. Small business startup loans can make things complicated for your business. Family and friends: If other options are not applicable, you can always turn to family members and friends. Your parents brought you up and seeing you successful will make them happy. If your business is worth their trust, they can willingly invest in it. The good thing here is that parents will not push you the same way bank will if you delay payments. However, to maintain a healthy family relationship, respect your obligation and try to repay the loan on time. Do not put your family and friends into too many risks. Let them know all the risks the business faces before they decide to invest in it. The major problem with this option is that parents and friends will always feel they have to be consulted when it comes to spending because they loaned you. Crowdfunding: This is one of the best and common way of financing new ventures. It involves sourcing funds from friends, clients, family, and personal investors through an online platform. You give your idea to a large number of people, and you will probably find someone willing to finance your venture. It is often referred to as online fundraising and has helped many startups successfully. Small business Startup loans can make things easier for your business. Grants: Although it is hard to qualify for these types of funding, they are very beneficial because one will not have to repay them. They are usually provided by the government, though recently some small business associations provide individual grants. Conclusion: These six alternatives for small business startup loans discussed in this blog. Consider first the options that you will not be required to repay such as grants. If you need a substantial initial capital, you can go for venture capital and business angels. Whichever option you take, you will be better off than someone using bank loan options. Read Also: Benefits Of NBFC Business Loans 6 Top CRM For Small Businesses In 2019 6 Loan Mistakes Every Business Owner Must Avoid What Entrepreneurs With Bad Credit Need To Know Before Applying For A Loan? What Is The Future Of Digital Marketing In Regards To Shaping Up Small And Large Businesses?

5 Critical Branding Tips to Attract New Clients to Your Auto Parts Shop

Building a brand is hard work. You have to really understand your business, your market, and your customers. Then you have to learn all the new social media tricks while keeping your traditional customers happy. Thankfully, getting started doesn't have to be overwhelming. Here are 5 branding tips to help you establish your auto part shop's brand. Basic Branding Tips: Start here before checking out the actionable steps. Before making any branding decisions make sure you have a clear vision of who you are and what you do. We know, we know, it should be obvious that an auto body shop fixes cars right? The trick is conveying that in your branding strategy. Make sure you know exactly what image you want your brand to present. 1. Know Your Existing Brand: When most small businesses set out to build a brand they forget that they already have one. Your reputation with customers, suppliers, and the local community is the foundation of your branding efforts. Ask regulars what they like about the way you do things. Get people to join your mailing or emailing list with each purchase. This lets you find out what the community already thinks about you and shapes your branding efforts going forward. 2. Clarity Is Key: You can have the best, most viral campaign ever and it won't do you any good if people don't know what it's actually for. Make sure any move you make is clear on what your business is. That doesn't mean you need a broken car in every picture. Just be clear in any logos, names, and promotional materials what your business is and what it does. 3. Produce and Display Value: No matter what your business does you have to produce value. That's the only reason people will use your services. Be certain that a value approach drives your small business branding strategy. Don't just go for attention-grabbing techniques. Try to embody the core principles and benefit you bring to customers. Let them know why and how you'll work hard to help them with their problems. A great start would be explaining the long term benefits of high-quality parts. 4. Get Online: No one would accuse an auto parts shop of being a startup. That doesn't mean you can't use the newest customer engagement tools to your advantage. Create profiles for your shop on social media. Find a few hashtags that work for your business and use them strategically. Building a brand takes time and requires you to learn new techniques. Check out sites like https://www.ultrex.com.au/brand/subaru/ for good examples. 5. Always be Scaling: A lot of people slow down once their brand is established. This is a mistake. Creating a brand is just the first step in your business' journey to prosperity. You need to make that brand work for you and your goals. Once you've built your brand image you're perfectly placed to scale. Add in new programs that leverage your existing customer base and brand recognition, such as: Referral programs Giveaways Local sponsorships Email list marketing You want to seamlessly combine old school local business practices with the wonders of modern media. Don't Be Afraid to Try: Establishing a brand from nothing is nerve-wracking. As long as you follow the best branding tips available it can be easier than you think. For more useful branding and small business tips, check out our other articles here. Read Also: 5 Tools That Can Help You Get Your Business Organized How We Could Be Able To Get Benefits From The Outdoor Marketing 4 Simple And Cheap Methods To Attract More Customers For Your Small Business

Standard Consulting Updating Businesses Now On ISO 9001 Changes

Whilst quality management system ISO 9001 is a set of International Standards recognized throughout the world, you could also describe it as a way of life or a mindset. Quality management is one of those things that just makes sense - in fact, much of it is exactly that, common sense! Practical, simple and very effective, it's a way of delivering the very best products and services to the customer - and implementing it really isn't rocket science! Whilst so much of this is commonsense, nonetheless, there is a set of policies, processes, and procedures needed to make it all happen. But this is a system that should be at the very heart of any organization. Whether you own a large company, a small business or you run a voluntary organization or charity, you have 'customers', and meeting their requirements should be your main goal. Well-oiled machine Standard Consulting in Brisbane sums it up perfectly when they describe ISO 9001 as a way of consolidating the many internal processes within an organization into one well-oiled machine. It leads us away from considering a business to be many different components running alongside each other, seeing it instead as a total commitment to quality as a whole. Standard Consulting's Quality Management System training packages help organizations of any size understand and adopt this concept, leading to improved performance, fewer complaints, more happy customers and a better bottom line. Crucially, it will also help organizations meet regulatory requirements and achieve ongoing improvement. Government tenders Quality Management System training helps businesses understand that their customers are not the only ones to consider. For example, a business chasing Government contracts and tenders is unlikely to make even the first cut without a QMS system in place. In our competitive world, where a tender might attracts hundreds of bids, Government departments need some sort of benchmark against which they can measure the applicants. Or perhaps you are an SMB wanting to join a major organization's supply chain. Again, it is unlikely you will be considered with a recognized system in place. Remember, that major company has to meet its own regulatory requirements and keep its customers happy, so it is crucial they work with like-minded organizations. In order to be effective, Quality Management System ISO 9001 must be embraced by everyone within an organization, from top to bottom. And decision-makers within the business need to consider it in the context of all future plans and policies. It also demands that all policies and procedures be documented, and constantly reviewed and updated, in much the same way the Standards themselves are revised and updated. Standard updates In fact, there has recently been a review, with the current version of the Standard being Quality Management System ISO 9001:2015. Three years in the making, this only goes to show how important and up-to-date these Standards are, formulated by professionals from throughout the world. Well over a million ISO 9001 certifications have been issued - a reassuring sign that businesses are really starting to take on board the importance of quality, in their goods, services and internal operations. ISO 9001 was revised to make it more in tune with how we do business these days - reflecting our global market better. Quality Assurance vs Quality Control As professionals such as Standard Consulting will tell you, it is far better to create a top-quality product in the first place - Quality Assurance - than to have to deal with returns and complaints later - Quality Control. It's a mistake to think that quality control is enough. As well as disappointing and potentially losing customers, producing faulty products that get returned is a complete waste of money for the organization. Better to get it the right first time, every time. There are, however, a few misconceptions about ISO 9001:2015, and these will be properly explained during quality management system training. For example, you'll hear some people say that the Standard is only for big organizations, or that it is only applicable to certain industries. That is not the case. Suitable for any business International Standards can be applied to any size organization, in any industry, and be just as relevant. The concept of quality products that are fit for purpose has nothing to do with the size of your business. In fact, we are seeing an increasing number of SMEs implementing these systems, because they can see how it saves them time and money and helps them secure a larger chunk of the market. Another myth is that it is only for manufacturing or retail businesses but again, this is untrue. Quality Management System ISO 9001 is used by hospitals, schools, churches, charities, police departments and more. To put it simply, every group or organization or business needs structure - and structure needs policies and procedures. Think about it - even families have structure, rules, processes, systems, and patterns. So it's fairly obvious you need the same processes and systems in business - but much bigger. To find out how your business would benefit, talk to Standard Consulting - experts in International Standards.

Benefits of NBFC Business Loans

What is an Unsecured Small Business Loan?