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All eyes are on 2023, as people globally look for revival in the economy and a return to normalcy post-pandemic. Businesses that fought hard to survive the consequences following the spread of the virus are now faced with a conundrum. On the one hand, as markets move towards normalcy, demand is rising, in some cases back to Pre-COVID levels. On the other hand, businesses struggle with depleted cash reserves to keep the business going, let alone leverage the growth.
And that is where term loans can come in. Business financing can help enterprises scale their business without adding stress to already distressed cash flows.
A business term loan refers to a one-time infusion of funds paid back over a pre-defined tenure at a pre-determined interest rate. Term Loans usually have a definite end use where the funds can be invested and could be secured on unsecured. The borrower can access term loans for a tenure of 1-5 years, generally. The repayment could be monthly or periodically, depending on the nature of the business and sanction terms.
Before you apply for a term loan, be clear about the purpose for which you need these additional funds. Make sure to consider how exactly you want to employ the funds to serve the growth of your business.
Additional Read: Everything You Need to Know about a Term Loan
Here is how you can use a term loan to grow your business in 2023
1. Upgrade machinery
Updating current equipment or purchasing new equipment can boost production costs and operations efficiency. While equipment can add to the productivity of the business, it can be quite expensive, requiring substantial upfront investments. Term loans could aid in the same by providing the funds necessary to make an outright purchase. At Tata Capital, we offer term loans at competitive rates of interest with customized repayment schedules to ensure ease in loan servicing for our customers.
2. Revamp business
The pandemic has derailed many well-established plans. Companies today are looking at future-proofing themselves to avoid jeopardizing their operations in case of such unprecedented circumstances. For example, a business now needs to invest in laptops to aid remote working, have a robust digital presence, and invest in cloud-based solutions to integrate their applications and support collaborative work. Some may need to invest in upskilling and training staff. A term loan helps fulfill many of these objectives without adding stress to the depleting cash reserves.
3. Expand Business
In several industries, there are opportunities today that weren’t available before. The time may be ripe to capitalize on existing strengths and market opportunities by adding new products and services or expanding to newer territories or expanding capacities to cater to the increased demand.
Companies need funds to leverage these opportunities, which many small businesses may not be able to afford. A term loan could fund the expansion of the enterprise through acquisitions, purchase of land or property or machinery, investing in research and development for new product offerings, and more.
Additional Read: What is the Difference between Term Loan and Working Capital Loan?
4. Grow revenue
With demands reaching pre-covid levels, companies can raise their game by stocking relevant inventory and taking on larger orders to fulfill. However, maintaining the requisite inventory and undertaking orders require investment in inventory and other raw materials to process them. A one-time Purchase Order Financing or short-term loan can help fund new stock to cater to the spike in demand.
Ensuring adequate funds can help capitalize on this surge in demand and grow the volume of business sustainably.
Don’t miss out on the growth opportunities and take your business to the next level in 2023 by talking to one of our advisors. Tata Capital leverages decades of experience to understand your unique business needs and offers you a solution that suits your requirements. Our end-to-end digital platform removes the grind from the loan application process and makes it easy to apply and manage your loan.
Policies, Codes & Other Documents