It is no secret that the coronavirus pandemic has had a staggering impact on all sectors of the economy. According to Government data, the number of small businesses in India had increased by 18.49% in FY19. But, they suffered a considerable setback in the wake of the economic restrictions posed by COVID-19. Fortunately, the government and other financial institutions have introduced flexi loans to steer through such financial emergencies.
Also called new-age term loans, financial institutions offer a pre-approved loan limit to small businesses, which is credited to their account. Keep reading to learn how flexi loans or flexi SME loans are paving the way for small business’s recovery in these challenging times.
Flexi loans offer numerous benefits
Many small business owners want to avail of business finance because of attractive business loan interest rates, but paying instalments in post-pandemic times can be a bit stressful – especially if the business has not regained its previous glory.
Flexi loans are specially designed to suit MSMEs and allow them to affordably re-initiate stagnated cash flow. These loans offer various lucrative benefits which are mentioned below.
Lower interest rates
A flexi loan or flexi MSME loan is unique because its interest rate depends on the loaned amount you use. For instance, you take a loan of Rs. 25 lakhs, but use only Rs. 15 lakhs of the loaned amount. Then, you will have to pay interest only on Rs. 15 lakhs.
Businesses in the post-COVID times are unpredictable, and you can experience a gain as spontaneously as a loss. Using a flexi Loan, you can ensure that the interest is solely based on the amount you put to use out of the total amount you have borrowed.
In a flexi loan, the lenders approve a credit limit beforehand. You can withdraw any amount you need within this limit. This is just like the overdraft facility provided by financial institutions.
Flexi loans allow you to borrow funds as and when you require them. Moreover, if you have savings or are experiencing profits in your business, you can easily make prepayments.
You can use the loaned amount to finance business-related expenditures like the cost of storing inventory, acquisition of machinery and equipment, rent payments, making investments, hiring staff and a myriad of things.
How to apply?
Many reputed lenders provide the application for flexi loans through the online mode. All you have to do is check your business loan eligibility, enter contact details, and a representative will contact you for the documentation procedure. You can keep documents like Aadhar card, PAN card, passport-sized photos, etc. ready.
In a nutshell, the new age flexi business loans are a convenient option. If you do your homework and borrow from a reliable lender, your business can quickly resume its operations in the post-pandemic period.