Finding the right finance option for your business means you have won half the battle already. After all, adequate funds are key to raising potential profits and keeping a business thriving. Availing business finance is the smartest way to ensure a steady cash flow for your project. It enables you to promote growth, minimise operational costs and maintain a healthy influx of capital.
Every business financing option comes with a business loan eligibility, loan tenure, and interest rate. Hence, you must assess your financial situation before choosing a lender and business finance offering. You can also choose between a short-term or long-term loan based on your purpose and requirements. Read on to find out whether long-term business finance is suitable for you or not.
Short-Term vs Long-Term Business Loan
Most reputed financial institutions provide the option of short-term and long term business loans. If you require immediate cash with quick approval from the lender, opting for short-term business finance might be ideal for you. As the name suggests, a short-term loan provides shorter repayment tenure that might range from one to three years. Besides, the loan requires less documentation and no collateral.
A long term loan for business, however, offers longer repayment tenure and a competitive interest rate. Thus, long term loans are suitable for big-ticket investments. Besides, it is a go-to type of financing option for established businesses in need of a large capital amount.
Additional Read: Short-Term Business Loans vs Long-Term Business Loans
Benefits of a Long-Term Business Loan
Here are some advantages of taking a long-term loan for your business:
• Extended Repayment Tenure:
The repayment tenure for a long-term loan is much higher than a short-term loan. It usually ranges from 10 to 15 years, and even more in some instances, making it appropriate for long term projects like acquiring new assets, improving business infrastructure, etc.
• Lower Interest Rates:
The interestcharged on long-term loans is comparatively lower. However, before settling on one, it is advisable to compare multiple lenders and their long term business loan interest rates.
• Small EMI Payments:
Another advantage of long-term business finance is that you will have to pay lower monthly payments. The longer loan tenure leads to shorter EMIs, which are much easier to manage with your monthly cash flow cycles.
• High Funding Amount:
At attractivebusiness loan interest rates, long-term loans are tailored for companies to finance their costlier goals like real estate, inventory, acquisitions, equipment etc. Thus, the loan enables you to get large funding from the lender.
Additional Read: Short Term Business Loans – Pros & Cons
The Bottom Line
While every financing option has its pros and cons, you must decide considering your needs and business goals. If you are looking for long term loans to cover your business’ longstanding financial requirements, turn to Tata Capital. We offer customised business loans at attractive interest rates and special features like online application, quick disbursal, and easy eligibility. You can also use Tata Capital’s EMI calculator to get a clear estimate of your monthly repayments. To find out more, visit our website today!