Advantages and Disadvantages of Taking A Business Loan

Each coin has two sides. Both sides of the coin have their meaning. Sometimes when someone likes one aspect of the coin, someone else likes another aspect of the coin. This means that everyone likes to see the coin from their perspective.

The same goes for financial products. If someone likes to do his essential work by taking a loan, then the other avoids the word loan. In such a situation it becomes very important to understand what is the positive aspect of the loan? And what is the negative aspect of the loan?

Today we will learn about the business loan in this article, what is the benefit of taking a business loan and what is the disadvantage of taking a business loan? Let us first understand what is the benefit of taking a business loan.

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Benefits of Taking A Business Loan

Just as it is universally true that money is needed to start any business, similarly it is also true that to run any business, regular money is required because business expenses are also regular.

Many times a situation is created that the businessman does not have his own money in his hands because there is a delay in getting payment from customers or money is stuck in the market. In such a situation, if any machinery is needed in business or if the employees have to be paid salaries then what will the businessman do?

This situation will be very troubling for the businessman. If the businessman wishes, then he can run his business smoothly by taking a business loan in this condition. In this way, business loans are very beneficial for businessmen. There are the following benefits of taking a business loan:

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To meet the immediate needs of the business

There is always a need for something in any business. Sometimes new furniture is needed, sometimes electronic equipment is required, all these requirements can be fulfilled by a business loan with a lot of ease.

Assisted in managing working capital

The expenses of the business are reduced in the income of the business and the amount that is left is the working capital of the business. It is from working capital that plans for the future of the business are made. Working capital can be managed easily through a business loan.

Purchase of raw materials easily

The MSME manufacturing sector requires raw materials to manufacture products. Manufacturing businessmen can purchase raw materials with ease with the help of business loans.

Help repay the previous loans

The majority of the businessmen have multiple loans for running their business which makes it very difficult for them to manage and they end up paying more as a penalty if they miss the due date.

To remove the complication of managing multiple loans, businessmen prefer to have a business loan from one source and if a businessman gets a bigger loan amount from one place then he/she closes the multiple loan accounts that give him/her both peace of mind and saves him/her to bear the unnecessary additional cost.

Getting tax benefits while filing ITR

Businessmen have to pay corporate tax for running the business. Taking a business loan for running the business provides tax deduction facilities while filing ITR returns.

Assistance in giving salaries to the employees

Any business goes through ups and downs and during COVID we have seen how a pandemic situation has affected the business which has indirectly impacted the salaries of the employees.

When the chips are down, the businessmen can take the business loans and pay the salaries to the employees and can recover the loss in the future rather than laying off the employees.

Helping to start a business branch at another location

When a business has a growth mindset then it looks for market penetration. The businessmen start looking to increase the business branch in another location. While doing this lot of funds are required as the setup cost for opening a new branch is much more than

Help to buy new machinery for business

For growing the manufacturing business it is important to increase the production level, and for this more machineries are required and small businessmen always face difficulties to arrange funds to acquire machinery and then they have to miss out on the opportunity of mass production and lose out to the competitors.

To cater to this issue, businessmen can take machinery loans from the NBFC like ZipLoan and purchase new machinery to increase production and grow their business.

Also Read: 6 Ways Business Loans Can Help Your Business Grow

Disadvantages of Taking A Business Loan

A business loan can never be a loss for a businessman because the requirements in the business remain are always there due to which the requirement of business loans also remains. In this way, we see that there is no problem in running a business by taking a business loan.

Get up to Rs 7.5 Lakh Business Loan from ZipLoan

If you do business and are thinking of taking a business loan to expand your business then ZipLoan is the best option for you because a business loan up to Rs 7.5 lakh from ZipLoan is available in just 3 days* without any mortgage.