Regular Business Loans vs. Microloans: What’s the Difference?
A constant flow of finance is the primary success for every businessperson. It can happen only when you know how to identify the right source for money. It is not possible to run the business in profit until you reach break-even and hence generating money from your business cannot be an immediate solution. Do not get daunted by this fact and every successful businessperson has gone through this phase.
Business loans are the best option and you need not just rely on a bank, as there are many NBFC’s which offer loans at the best rate. Yes, at Flexiloans we process your loan in 48 hours, full online process, no paperwork hassles. You can start any business and we can support you with a maximum loan amount of 1 crore.
Nevertheless, we would like to tell you something about a microloan. Have you heard about it? What is it basically? How does it differ from a business loan? This article will explain about those things.
What is a microloan?
As the name implies these are loans offered for a short time and a smaller amount.
Now, with this basic definition and without going into deep let us brainstorm a few things about a business loan. Post that, we will help you understand the difference between business loan and microloan to enlighten you with the right decision to choose for a loan.
Why does a businessperson look for a loan?
Every business needs a loan to not just start a business but to keep it activate, expand and move forward. Therefore, the need for money in business is required at different stages and cash flow is the key to confidence for every business. Money is required to handle emergency business expenses. It allows business expansion without any delay hence offers great profit to business owners. There is no threat of repaying the loan as the duration is well-ventilated letting owners take time to utilize or rotate the money in business.
What is expected from a business loan?
Quick process, best interest rate, minimal service charges, very limited paperwork, handsome money, etc. Yes, this is what the majority of the entrepreneurs look at and you are one among them.
Understanding this, we at FlexiLoans offers your business loan with the following features.
- Our loan processing time after completing the application form is just 2 business days
- We do not ask you to submit several papers but just upload your personal KYC, business KYC, and your GST registration certificate. GST business loans are tied up with several benefits as announced by the Indian government and we want to enjoy those luxuries as well.
- You can choose any location in India and we can provide you with a loan to start your business and we are operating branchless across all locations in India
- Choose the amount and let us know and we provide you with a maximum of 1 crore as the loan amount.
- We don’t trouble you with any collaterals and absolutely unsecured business loans are processed.
- Our interest rates are optimum and you can enjoy the benefits.
- Minimum processing fees and we want you to talk us to personalize your loan application.
Now, coming to the actual point. Yes, the loan amount. This is where you are stuck. Here you can understand the difference between microloan and business loan to choose the best one suiting your business needs.
Just knowing about the business loan is like looking at one side of the coin. You need to know about microloans as well. Hence, we have listed the difference between a business loan and microloan to give you an idea and allow you to choose the right one at the desired time.
Business loan Vs. Microloans
The amount required as loan
Compared to a traditional business loan, microloans can be borrowed even for a small amount and as small as one lakh. On the other hand, you can get business loans for a small and large amounts. You can also decide the tenure based on your convenience. Microloans are time-bound and you can get them for small period.
Interest rates designed for microloans are fixed and usually, they are higher. Unlike business, loans offer flexible interest rate and they are hence business-friendly. Especially NBFC offers an interest rate that is personalized based on the need of the borrowers.
Yes, the amount is low and so the tenure but the interest rates are higher. The nonprofit organization provides microloans and thus they need to arrange for funding. They need time to do so and hence advance booking is required to be done. But, business loans can be taken anytime and any duration. Companies like FlexiLoans are always available to arrange for a business loan for any tenure you choose to. We also suggest you choose a tenure and close it by extending your loan amount and make it a fresh loan with a different tenure. Yes, those are the flexible features with business loans.
Features of the loan
Microloans can be taken only for selected business and you have limited liberty in using for any purpose. However, it is not the case with a business loan and you can use the money for improving cash flow, purchase raw material, pay wages, or use them for reserve. Thus, it is flexible and you only need to pay the interest as per the dates discussed. The utility of the money is at your discretion.
Also, business loans are collateral-free. Especially these unsecured GST business loans can be availed without any asset as a guarantee. If you just have a GST registration certificate, then you are good to opt for a loan.
In short, understand that one can choose microloan in case they look at starting a small (micro) business like freelancing, mobile foods, etc. Getting some money will help such people run their living. But a business loan will allow you to choose any business and loan amount and tenure and you can grow as big as you dream for.
The sky is the limit and starts aiming high today. Thus, business loans coming with so many flexibilities when compared to microloans would be the right option to choose for establishing your business.