Smaller businesses are the lifeline of any developed or developing nation because of their potential growth. Statistics show that small businesses contribute up to 25% of the country’s GDP. However, one of the biggest challenges a small business faces is the lack of financial abilities to fuel its growth. Yet, the government of India is committed to helping such businesses scale their operations.
For example, new machinery added can do wonders to the companies which can contribute to the overall economy of the country. Such an action helps us understand the encouragement offered by the government to small businesses. Apart from the government, even private lending institutions provide loans to smaller organizations to help overcome any challenges they might face due to a lack of finances. The below section would help you understand about planning your SME expansion with the leveraging of loan facilities offered by multiple spheres. In today’s era, there are various options available for small business owners to expand their business. One of them is the availability of Small Business Loan in India. There are a large number of small and medium-sized enterprises that are not eligible to grow their business due to the lack of expenses.
How to Expand Your SME Business with A Loan?
There might be several requirements for a smaller organization as it continues to grow. As mentioned before, it is easier to get a business loan in India, but how to use these expenses is completely in your hand. Hence you can use the finances to cater to various requirements as below:
- Facilities expansion
You might want to rent/lease a new office or add more space to meet your needs for expansion of facilities. Such an increase can also include residential/resting facilities for workers and to meet such requirements; small business loans would come in handy.
- Purchase of machinery/equipment
If you are running a factory to produce high outputs, your existing machinery can get deteriorated and can involve expenses to repair the same. Likewise, you can also purchase a newer mechanism to improve your production. You can leverage the finance options offered by the lending institutions to fund the relevant use cases and also to buy raw materials. If you are in the business of transport, you can empower yourself by purchasing new vehicles and expand the operations to reap more profits. Hence financial support at the right time by the lending institutions can do wonders to your small business.
- Promotional activities/marketing costs
Even if you offer one of the most effective products/services to your clients, you need the right marketing initiatives to put your service/product in front of your customers. Marketing typically involves higher costs, and hence you can avail smaller business loans in India to fund your marketing initiatives. There is a broader spectrum of opportunities when it comes to marketing, i.e. the small business owner can opt for traditional marketing methods or digital marketing methods to find newer leads. Both the marketing methods can incur higher costs, and as a business owner, you can leverage funds to achieve your promotional/marketing activities. Note that the marketing activities if done right can have a considerable impact on the growth of any business as some of the most prominent organizations across the world have grown tremendously because of their marketing efforts. A small business owner can adopt marketing initiatives that are in alignment with his/her firm policies and see better results.
- Working capital
Working capital expenses can refer to day-to-day costs or any costs needed to run or sustain the business. Such payments can be of worker salaries, inventory expenses, or to manage different operations. You can also use the finances to meet your insurance costs, license costs, and much more. Interestingly, NBFCs are more flexible to fund the requirements of smaller organizations than their banking counterparts.
As mentioned before, financial institutions are coming up with newer policies to fund the growth of the smaller businesses and hence the firm owner needs to submit relevant business loan documents and fulfill the eligibility criteria for it. After processing and verification, owners can avail of loans accordingly.