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How can a small business loan provide benefits to a startup?

 

In current times, people are looking to get funds for their business with lower interest rates and better schemes. However, entrepreneurs with established businesses also require funds for some emergencies such as marketing expenses, paying salaries to their employees, business expansions, or slow seasons. Small business loans can help entrepreneurs or startups fund their businesses and take out major cash flow issues.

 

What is a small business loan?

Small business loans are borrowed funds from a lender with an interest rate to be repaid within a certain tenure. It is considered to be one of the most convenient and flexible options to solve your business funding issues. You can approach a lender for the issuance of a loan or a nearby credit union for the same. The small business loan generally offers low-interest rates as compared to other types of loans.

 

Benefits of taking a small business loan- 

There are plenty of reasons to lean towards small business loans for expanding your business or starting a new one. Some of them are given below-

  1. Convenient and feasible option- Nowadays, every city has various banks or money-lending institutions available in the market. There are also online lenders which offer various schemes to their customers. Therefore, it is highly convenient and easy to approach a lender for issuing this type of funding.
  2. Low-interest rates- People who are already having a good credit score can secure low-interest rates on the loan. The interest rates depend on the amount borrowed, credit score, the viability of a business, the financial condition of the company, and a few other factors. However, traditional lenders like banks or credit unions offer Annual Percentage Rates (APR) starting from 4% to 13%.
  3. Access to a large amount of capital- Business owners who are looking to grow their operations or expand their niche can borrow funds accordingly. However, people willing to start their own business and want to invest a large capital at the beginning can also borrow funds for the intended purpose.
  4. Different types of businesses need different types of loans- The amount of loans depends on the requirement of the business. Every business has its own needs. For example, for growth and refinancing SBA 7(a) or SBA express loans. CDC/504 loans can be used for purchasing heavy equipment, machinery, or any other business asset.
  5. Convenient repayment- Small business loans also offer flexible repayment options according to the convenience of their customers. They offer the repayment option depending on the cash flow of the business by understanding the complexities involved in running a business. Also, the borrowers can increase or decrease the amount of EMIs depending on the financial condition of the company.
  6. Tax benefits- Small business loans also avail some tax benefits to their customers. In some sections of the Income Tax Act, it states that the percentage of profit utilized for repaying the loan is exempted from tax.

Finance, manpower, and technology are the essential keys to a successful business. Therefore, the required cash flow will be highly crucial for any business which can be used for different purposes. Hence, a small business loan can help you in achieving those goals and grow your business eventually.

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