Advantages of funding a business with bank loans.

btaliat

VIP Contributor
Funding a business is the hardest stage of business organization especially for an intending business owners. It is because of this difficulty that has made a new business owner made Bank loan their last resort while funding their business.

Many would argue against the bank loan because of some problems that are associated with it which include high interest rate, difficulty in obtaining it and a lot more. But this doesn't mean bank loans don't have their own good sides..

Banks loans have promoted hardwork. Naturally, people tend to work at their own pace. The only thing that makes people work at their maximal level is if there is a target they want to meet. Having interest rate to sort out has made some new business owners to work with their full capacities.

Ability to secure a bigger loan. Banks always keep credit score. They always look for investors that do not default while repaying their loan. When a business owner satisfies all these conditions. He may be opened to obtain bigger loan at minimal or low interest rate. This will help him to expand his business.

Bank loan ensures confidentiality. Banks won't broadcast your name for obtaining loan from them just like your relatives or even friends may publicize you for borrowing from them. The agreement is strictly between you and the banks.
 
Last edited:

Mika

VIP Contributor
If you have a great business idea and if you believe your idea can become very successful but you do not have funds to start the business, bank loans can come in handy. You can immediately start your business with a bank loan. However, loan can be problematic as well because you will have to start paying your loan even before you start selling,
 

Kingsley

Valued Contributor
Of course there are enormous benefits of accessing loans to run a business with loans. Although I know people are of the opinion that we shouldn't obtain loans to either run or fund a business, but I think otherwise because I know there are enormous benefits. The only time I will not really accept or advice people to access loans is in starting a business because at this time the entrepreneur will have gotten little or no experience about the business he or she intends to starts. But when you access loans to run a business first it increases your capital which spells more profit mostly when the interest on the loan low. And it helps the entrepreneur to be more serious with the business.
 

Jasmine

VIP Contributor
The first requirement for a business is funds. If you do not have funds, you cannot start a business. There are multiple ways to build a capital for your business and getting a loan is one of them. However, getting loan is not an easy job. You might get a loan from a lender but lender charges are very high. In my place, you might have to pay upto 36 percent interest for private loan. However, bank loan has less interest rates, about 10 percent. Getting a bank loan is difficult compared to getting loan from private lenders. You will have to do a lot of paper works.
 

Caramelle

Active member
Bank loans are not accessible to everyone. You have to establish yourself as someone who has the capacity to pay. If you are a regular employee of a stable company and/or you have real and verifiable assets in your name, you may have a chance to leverage these attributes to borrow money for a new business. If not, it would be difficult but not impossible. There is no such thing as minimal interest when it comes to non-collateral bank loans. Even then, bank loans are better than obtaining funds from loan sharks which charge higher interests and impose harsher terms. By the way, when you take out a loan, this information usually does not remain between you and the bank. It is commonly reported to a credit bureau.​
 
D

Deleted member 28127

Guest
Most people have lack liquidity because most of the client pays per check but do not precise today like today is 05/01/2022 and the date of the check is 5 February 2022 means you will have your money on 5 January 2022 but you will not deposit the check before 5 February 2022 else you lose your client. This is why businesses have lack funds to pay loans sometimes.
 

Mellorando

Banned
There is absolutely no doubt that Business loans are of great help in meeting working capital requirements and expanding the business. In addition, it can help in maintaining the cash flow during difficult times. In the changing economic climate, business loans can help strengthen your financial stability during lean periods. Funding is imperative for a business to get off the ground. It will allow your business to grow and move in the right direction. While it's important to be able to fund the business yourself, you can seek outside funding for working capital as well. Don't let lack of capital get in the way of your dream business.

What are the advantages of bank loans?
1. Allow you to grow your business
2. You keep full control of your company
3. Reputation
4. No interference from the bank
5. Favourable interest rates
6. Banks may offer extra services

Let's also talk about the disadvantages of bank loan:
What are the disadvantages of bank loans?
1. Strict eligibility criteria
2. Lengthy application process
3. You may not receive the full loan
amount
4. Not suitable for ongoing expenses
5. Secured loans carry risk
 
Top