Home Finance Expand Your Small Business with A Term Loan in 2021

Expand Your Small Business with A Term Loan in 2021

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People all throughout the world are looking to 2021 for economic recovery and returning to normalcy following the pandemic. Businesses that fought tooth and nail to endure the fallout from the virus’s spread now confront a dilemma. On one hand, while markets stride to normalcy, demand is increasing, returning to pre-COVID levels in some cases.

On the other, as cash reserves have largely been depleted, businesses are struggling to run their operations, let alone increase their levels of growth. Here’s where a term loan can come in. Corporate financing can help businesses grow without putting an additional strain on already stressed financial flows.

What is a Term Loan?

A term loan is a one-time funds infusion that is repaid over a set period of time at a set interest rate. Term loans are often intended with a specific end use in mind and might be unsecured or secured. The borrower has the option of taking out term loans for a period of one to five years. Subject to the nature of your business and the terms of the sanctioned loan, repayment could either be monthly or even periodically.

When you apply for any term loan, it’s important that you identify its actual purpose beforehand itself. You should think about how exactly these funds are going to be employed so that they are directed towards growing your business. 

Here are a few ways that you can use term loans for business growth in 2021:

  • Machinery Upgradation: Updating existing machinery or purchasing new equipment can be an impetus to production costs and increase operational efficiency. Although equipment can increase a company’s productivity, it can also be highly costly, requiring significant upfront investments. Term loans could help by providing the finances needed to make immediate purchases. Bajaj Finserv is a trusted financial institution that offers excellent term loan interest rates and sufficient flexibility in repayment schedules.

  • Business Revamp: Many well-laid plans have been wrecked by the pandemic. Today’s businesses are attempting to future-proof themselves in order to prevent endangering their operations in the event of such unforeseen events. For example, nearly every business now needs to invest in laptops to facilitate remote working, have a strong digital presence, and provide cloud-based solutions that integrate  their applications and allow collaborative work. Some companies may need to spend on upskilling and training their staff. Many of these goals can be met with a term loan without putting additional strain on already depleted monetary sources.

  • Business Expansion: Today, there are opportunities in various businesses that were previously unavailable. Now might be the perfect time to build on your existing strengths and the market prospects by adding a few new products or services, expanding into new territories, or increasing capacity to meet greater demand. Many small firms may possibly not have the funds to afford the expenditures required to take advantage of these opportunities. With excellent term loan interest rates, term loans could be used to support acquisitions, purchase machinery, property or land, and conduct research and development to offer new products, among other things.

  • Revenue Growth: Businesses can step up their game as demand reaches pre-COVID levels by procuring relevant inventory and accepting greater orders. Maintaining the required inventory and managing new orders, on the other hand, necessitates substantial investments in inventory and raw materials to fulfill them. 

A one-time short-term loan or Purchase Order Financing might assist fund additional inventory to meet the increase in demand. Having enough cash on hand will help you capitalise the surge in demand as well sustainably increase your business volume.