Business loans are meant for people who are into business but they are now also being extended to firms that are providing various kinds of services, as they too, are in the business of being a service provider. For example, a business is mainly synonymous with the concept of production and retailing, but there are various new kinds of businesses on the horizon as well. A start up which is going to provide digital marketing services, or a company which plans to provide catering services, might be a service enterprise, but it is still a business formed and run by an entrepreneur or a group of partners.
Contrary to popular belief, there are quite a few benefits of business loan for service enterprises.
- Flexibility is a major factor here. The service owners can avail different types of loan depending on the requirements of fund. They might apply for business loan for a short term or a long term basis. Again, they can opt for a working capital loan as well to tide over certain financial hiccups as and when they come up. The overdraft facility of current accounts can also help in this regard, as agreed upon by the terms and conditions.
- The repayment options are also quite convenient indeed. They are free to work out a repayment plan as per the business cash flows and an income based repayment plan is most required. There are also options for bullet payments to be made, to pay off the amount periodically. The EMIs could be increased or lowered as well, but that also depends on the policy of the lender.
- There is an idea that business loan interest rates are very high and even if they are meant for services, they remain unchanged. However, that is not true and the interest rates are based on a lot of criteria like tenure, the current financial situation of the business, the present market trend and above all, the credit rating of the borrower. It goes without saying, that a good credit score will allow the user to get their loans approved in lower rates.
- Business loans for service enterprises are quite easy to avail. Financial institutions like Bajaj Finserv, offer business loans without having to offer a collateral or any kind of guarantee. It is also possible to avail these loans online and the payment options can be set up likewise as well. With online options, the borrowers are also able to keep a track on their payment schedule, interest rates in case of floating interest and the repayment history.
- With these loans, it becomes so much easier to sustain and grow one’s business. If the loan works out fine and the repayment goes well, the borrower also establishes a long term working relationship with the lender. This paves the way for a smooth banking relationship and also increases the credit score of the borrower. The service enterprise, in turn, flourishes and the returns are better than ever.