5 Questions You've Always Had About Business Loans

Mar 07, 2017

So your business needs that urgent infusion of funds to keep the ball rolling. Maybe your day-to-day liquidity situation is bit stretched? Or you have a great idea (and a sound business plan) for a killer new start-up? Or you're looking to expand and extend your existing business? Any which way, a business loan from a considerate and responsive partner like Tata Capital can be just the thing you need.

A lot of people have cloudy perceptions about business loans. Read our companion myth-busting piece here to set your mind at ease. Once you've made up your mind about needing funds to fuel business growth, here are some of the additional queries you may need resolved.

For the Start-up Whiz: A business loan does not entail a stake in your business -

Angel investors and venture capitalists are all the buzz in today's internet fuelled information age. But don't give banks and Non-Banking Financial Companies (NBFCs) a complete miss in your search for funds. Unlike those other guys, we'll charge you a pre-determined rate of interest and require no equity stake in return for fund disbursements. Our network of branch offices and advisors is much wider than theirs. We're easy to find, and easier to approach, whether by phone, online, or in person. And best of all, if your business plan and documentation are sound, then disbursal is quick and painless.

Related: How small businesses in India are financing their business needs

For the SME Owner: A business loan can help in so many ways -

You may want to have a separate pool of funds for HR and marketing expenditures and not use revenue streams for them. A business loan can be just the infusion you need to run an HR department and meet your marketing, advertising, inventory, training or payroll expenses. You also avail tax write-offs against business loan interest, which is a definite sweetener in favour of availing a business loan. And most of all, with Tata Capital's Flexi EMIs you have a range of payback options that'll suit your specific repayment capabilities. Study the revenue potential of the needs you intend to finance with your business loan, and then reach out to us - we can help.

Related: Did you know SMEs and MSMEs can get business loans?

For the loan newbie: "But I have personal funds I can use from time to time for business" -

Not a good idea, here's why... Accounting hassles. The single most important reason to maintain a separation between business funds and personal is the sheer confusion it results in come tax-time. As a business person you pay TDS, Service Tax or other Value-Added taxes- having a separate stream of business funding will keep the books clean when time comes to file them all, and steer clear of audits. Also, if your business goes through a lean time and repayments suffer, you will have unnecessarily jeopardised your credit score because you used personal funds in your business. Muddling the two will also not present a clear indication of how your business is doing as a stand-alone entity, which will also affect its credit-worthiness for the future.

Net take away... whatever your need for business funds - read up online (which is probably where you're reading this piece in the first place) ask friends and family, and speak with one or 2 financial advisors to determine the best source of funding for you. At Tata Capital, we pride ourselves on having an elaborate range of funding options for you to choose from and we'll be happy to partner with you.