To ensure business success, you should always strive to adopt the latest technology, state-of-the-art equipment, and the best strategies. And keeping up with the newest advancements is more important than ever in today’s competitive business landscape. If you do not keep up with the times, you risk losing out on revenue and stagnating your business growth.
However, upgrading your business is not so easy. Sophisticated enterprise software and heavy-duty quality equipment can cost you a small fortune. Providing electronic devices and tools to your employees or upgrading your existing tech stack can also be a significant investment. If you lack funds, you may keep postponing the decision to grow your business. If you delay too long, you may miss out on countless growth opportunities. Such a situation is not ideal, especially if your run a growing business.
So, what can you do to arrange funds for your business in such a situation? A term loan can help you. Read more to find out how.
What is a term loan?
A term loan or a business term loan is a one-time loan borrowed as a lump sum. Then, you can pay it back over a fixed tenure at a fixed interest rate.
Term loans have flexible tenures. Typically, most lenders offer you a tenure of one year to ten years. They also have easy repayment options. Depending on the loan's terms and conditions and your loan amount, you can repay it in monthly, bimonthly, or quarterly instalments.
How can term loans help your business?
Term loans are an excellent option for small and medium business owners who need quick cash to upgrade their business. Here are some reasons why:
- They allow you to access the funds you need immediately: If you have a clear idea of how much you need and how you will use the money to upgrade your business, then you can apply for a term loan and access the lumpsum instantly. By using a term loan, you can get instant access to funds. Therefore, you do not need to liquify your ongoing investments or risk losing your business asset. Thus, it ensures a consistent flow of capital and ensures your business’ steady growth.
- They provide flexible tenures: The tenure for short-term loans can be less than one year. The tenure can range from one to ten years for medium-term and long-term loans.
- Term loans are multi-purpose loans: Unlike equipment-only loans, you can use a term loan for multiple purposes, such as:
- Buying new software like CRM tools, inventory management software, accounting software, etc.
- Expanding your business operations to other locations
- Launching an e-commerce store
- Running advertising campaigns, whether on traditional or digital channels
- Hiring new staff to meet growing business demands
Things to consider before applying for a term loan
While getting a term loan online is convenient, you must not do so in a haste. Before you finalize your loan amount and submit your application, here are some things you should consider.
- Decide how you will use the loan amount: Before applying for a term loan, ensure you know exactly how you plan to use these additional funds for business growth. This step will also help you understand your loan tenure. If you want to borrow a term loan for your short-term business goals, you should opt for a short-term loan. If you have planned out a long-term goal, you can borrow the amount for a longer tenure.
- Anticipate and plan for additional expenses: You will have to repay your term loan through EMIs. However, be prepared for additional expenses such as the processing fee, document processing charges, and down payment. These overhead expenses depend on your lender’s terms and conditions.
- Know that your loan approval is at the discretion of your lender: Getting approval for your term loan depends on your lender’s process and due diligence. Since term loans are usually offered to meet specific business requirements, your lender may investigate if your plans are viable before approving your loan application. Apart from the viability of your project, lenders will also consider revenue projections, credit capacity, monthly cash flow, business credit history, and the value of your collateral (if you opt for a secured term loan.)
Apply for your term loan today!
A term loan is the most convenient way to arrange funds quickly for your business. What’s more, when you opt for a term loan, you don’t need to liquify your investments or put your business assets at risk.
Do you need a term loan? Reach out to Tata Capital today.
With Tata Capital, you can avail of term loans for your business at attractive interest rates. The loan process is quick and requires minimal documentation. Whether you want to invest in technology, machinery, advertising, or manpower, our bespoke business finance solutions empower you to meet your needs quickly and conveniently.
06 February 2024
5 mins read
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