Why Timing Matters When Applying for Business Loans?

All businesses, whether multinational corporations or small businesses operating from their house basement, need funds to grow. Usually, friends or family cannot cover the huge amount of money that businesses need, so your best option is to apply for business loans. Banks and NBFCs offer business loans to companies, depending on their financial records, size, year of operation, and profits. Business loans provide several benefits like collateral-free sanctions and faster money disbursals so that you can take the next steps in your venture without worrying about your capital.

Why Timing Matters When Applying for Business Loans?

Depending on the kind of interest rates you can avail of and the repayment tenure, the timing of your business loans can impact the overall success of your venture. It is not just enough to understand that you need external funds but correctly timing those cash flows can ensure smooth day-to-day operations and regular equipment maintenance.

Companies that do not leverage funds at the right time either have to compensate with their growth curve or take a small amount and mess up their finances when their credit lines have maxed out. Businesses need to evaluate their financial statements and get more clarity about how exactly they plan to use their funds before taking loans. Read on to know more about what you can do to ensure that you are applying for business loans at the right time.

Best Time to Apply for Business Loans

  • Expanding their venture: Expansion, whether in terms of a new office space or targeting a new market overseas, or hiring new employees, is a sign of growth for businesses. However, like everything else, these decisions also cost a lot of money. Business loans offer the in-hand cash that these decisions require. They can also help companies adapt to a new updated business model or acquire new technology to stay on top of trends.
  • Hiring new employees: A business is only as good as the people working for it.  When retaining employees is extremely difficult, business loans may help you tide over economic instability and continue to hire new workers, keep the sales cycle running, and pay your existing employees for their services. You can also organize workshops and take an interest in helping your employees upskill because it will benefit your organization in the long run.
  • Upgrading industry equipment: Businesses, especially those who manufacture products, have to upgrade their equipment to meet sales demands. Small to mid-range businesses often have to automate their paperwork or any other tedious manual process so they are always on the lookout for such technologies. Business loans offer every venture the chance to scale up and conduct operations on a much larger scale.
  • Upgrading inventory: If you have a particular season where your business makes the most amount of sales, it is always a good idea to avail of a business loan right before it to stock up your inventory. It will help you cater to customer demands and possibly increase cash flows and reach new heights. Lenders will also be most likely to offer you a good sum of money if your previous records prove that your business sees a spike in profits during a particular season.
  • Research and development: Given the shifting trends and dynamic nature of products post-pandemic, business owners must keep a keen eye on the market. One must expand its product lines and upgrade its tools and systems at the right time to stay relevant. However, businesses must begin researching and gathering funds for the same since much before. Hence, businesses with a sharp eye can gain insights from shifting trends and prepare to adjust according to customer preferences.

What to Keep an Eye on When Applying for Business Loans?

Here’s a quick list of things to note when applying for business loans to ensure that you get the lowest possible interest rates.

  • Economic conditions: You can align your business goals with a stronger economy to get favorable interest rates. If the economy is weak, repo rates are high, and banks are very cautious in giving out loans, you may not get business loans or you may get stuck with high-interest rates. On the other hand, if you apply during a time when market interest rates are low, you will also have a better chance of getting approved for a loan with better terms.
  • Business conditions: Although business loans are primarily taken to upgrade one’s business to the next level or help it out of a tight spot, lenders do not want to invest their money in a struggling business. If your business is going through a transition phase or you recently faced a bunch of losses, it is best to wait it out before applying for business loans. However, if you want support to expand your business, you may take out loans.
  • Seasonal dips: Most businesses are impacted by seasonal fluctuations, especially those that offer travel services, which may see profits dip during the off-season. If you are aware that your business faces a low season, it is important to time your business loan application accordingly. Applying during the low season may get you rejected or slap you with higher interest rates while applying during the high season may help you avail of favorable loan terms.
  • Planning ahead: If you are planning to automate some manual processes, hire a large number of employees, open a new function, bring in new product lines, or plan to expand into a new market, you must start preparing for it beforehand. By planning ahead, updating your documents, maintaining your credit score, and developing a good relationship with the lenders, you can maximize your chances of getting the best loan terms.
  • Competitors: Businesses must keep an eye on their competitors. You do not have to track their every move, but knowing how their revenue is doing will help you to plan for your growth. If the market is turbulent and many businesses are seeking external help, lenders may offer less favorable loan terms.

While being cautious is usually a fail-sale plan, businesses require you to take a healthy amount of risk if you want to rise to the next level. If you want to discuss your proposition with some experienced individuals or want a reliable financial institution, ApnaPaisa is the right place. They will help you figure out what loan amount you should take depending on your purpose and help you avail of the lowest interest rates.


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