A business finance loan for a service company is very beneficial and can be used in a number of ways. A service company many times find its expenses for the initial period higher than the revenues it earns. And so, it looks for a business finance loan that can help it business meet its financial requirements. In this blog, we shall discuss the business finance loans for a service company in depth.
In the past few years, our country has witnessed the growth of a number of start-ups in the service sector. Most of them belong to the fields of hospitality, education, transport, entertainment, travel, hospitality, marketing, e-commerce, and consulting. However, most of the service sector companies start with very modest funds.
Said that, they earn fewer revenues as compared to their expenses in the initial years as a result. And for the service sector companies which are generating enough funds, they sometimes face a paucity of funds. The prime reason for this can be a late payment from the customers – accounts receivable. Even though they are generating enough profits, they have limited liquidity which can have a negative effect on the business.
At this point in time, they look forward to availing an SME loan for their service company. Availing a business finance loan can be a wise decision since it will provide with immediate funds and help business meets its fund requirements.
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What kind of Business Finance Loans are available in the Market?
The service company sector in India has various sub-domains. The business finance loan for a service company is offered by many banks, NBFCs, and online lenders in India. However, the ability of the NBFCs to offer unsecured business loans to SMEs and MSMEs in India has made them the most ideal option. The digital technology used by them is further making them the best option in terms of ease in availing loan.
A business finance loan for a company in the service sector can be a working capital loan, flexi loan, term loan, or capital loan. All these loans are available in the market and are specifically tailored to the needs of the borrowers.
Working Capital Loan: A working capital loan is designed to meet working capital requirements of the business owner. A business not having enough liquid funds can avail working capital loan to ease the situation a little bit.
Short-term Loan: A short-term business loan is availed for a very short term, as short as just 6 months. A short-term loan is availed to meet the short-term requirements of the business.
Capital Loan: This type of loan is availed to increase the capital of the business. A capital loan is specifically availed for the growth and expansion purpose.
How to choose the best Business Loan that Suits your Requirements?
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A business loan application requires you fill the purpose for which you are availing the loan. In addition, with the types of business finance loans available in the market, you must know the purpose so that you can avail the best loan product and use it efficiently. So, it is good to have an idea of the purpose for which you are availing loan and also the amount you would require.
For instance, if you are buying motorcycles for your food delivery company, you can search their prices and fill the same in the loan application. While there is no rule that you must not apply for a loan for an amount more than what you require, you are suggested to not to go overboard. This will lead to high-interest costs and EMIs.
How to Apply for Business Finance Loan: The Process
To avail a business finance loan from a conventional source such as a bank, you will have to visit the lender’s office. Upon visiting the office, you can discuss your business loan requirements and the complete procedure for it. You may have to submit the hard copies of photographs, ID proofs, income proofs, and business financial health documents.
Whereas if you choose to avail a business finance loan from a FinTech Company, the entire process is comparatively very easy. The business loan eligibility criteria will differ from one lender to another. The FinTechs in India only requires the assurance of the borrower’s repaying abilities for which they can ask for documents related to the operational activities of the business.
To avail a business finance loan from an NBFC or an online lending company, you can apply for the loan online through their website. After applying for a loan for business, next, you will have to upload the required business loan documents. The lender will check your eligibility and the documents you have submitted.
If everything seems fine to them, they will disburse the loan in the number of days/months mentioned on their website. The amount will be directly deposited into your bank account.