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Why MSME Loans Are Better Than Liquidating Your Assets

Posted on
Feb 17, 2023
business loans

Starting and running a business requires a steady capital flow, and there’s no denying that. Everyone needs a lump sum amount ready when building a new business from scratch. Most business people save up that amount from years of financial planning. In contrast, others decide to start with an MSME business loan. Both methods have their risks and benefits. And this debate is broader than new businesses. Even established companies need money to keep running.

The answer here lies in doing a cost-benefit analysis.

What is a cost-benefit analysis?

Every financial commitment needs a cost-benefit analysis. A cost-benefit study is a process that determines which decision will lead to what consequences and will give the maximum returns. Before liquidating any assets or getting a loan, a business person should do a cost-benefit analysis. We suggest businesses seek professional advice on this one.

In a cost-benefit analysis, you will discover whether liquidating the assets is worth the risk. In situations where the assets give less yearly returns liquidating them might be the right choice. But liquidating assets with high value and yearly returns doesn’t seem ideal.

Let’s understand this via an example.

Amount of FD Yearly Returns Loan Amount Yearly Interest Rate Ideal for liquidation
Rs. 2 Lakhs 5% Rs. 1.5 Lakhs 10% Yes
Rs. 2 Lakhs 11% Rs. 1.5 Lakhs 10% No

Due to situations like the above, it is essential to determine which method will be the most beneficial. And doing a cost-benefit analysis is the best way to go about it. Before applying for a business loan, make sure the business can repay the amount in full. Tools like a business loan EMI calculator always come to the rescue. FlexiLoans has its business loan EMI calculator that businesses can access through its official website.

Benefits Of Taking A Business Loan Over Assets Liquidation

This article aims to make everyone aware of all the possible benefits of taking a business loan instead of selling personal assets. Below are some top benefits.

Easier And Faster Than Assets Liquidation

Taking a loan has become easier than ever. One can apply for a loan from the comfort of home. Non-Banking Financial Companies like FlexiLoans provide online business loan facilities. Applicants must upload all the essential documents on the FlexiLoans portal to get a loan in less than 4 days. But asset liquidation, on the other hand, takes time, especially if it’s a property. Finding the right buyer at the right cost is a long and tedious process. In such cases, businesses are better off taking a loan. 

Tax benefits

We have to pay the interest rate for a business loan, which leads to paying back more than what we borrowed. But what most people need to learn is that one can avail of tax return benefits on the interest amount. Doing so returns a part of the interest paid. Of course, we still have to pay the interest amount, but the money saved is money earned.

Separating Business From Personal Life

Using one’s savings for a business is never an ideal choice. Personal savings are to enjoy and use in emergencies. If we put all or most of our savings into a business, we are left with little room for a better lifestyle. Recreation and entertainment will become sparse as we invest our savings elsewhere. One might not have the necessary amount readily available in medical emergencies. Middle-class families typically face these scenarios. But if one avails of a business loan, their savings are free to use as they wish and when required.

High Credit Score

If the business has never borrowed money from any bank or NBFC, it has no credit history. Which ultimately translates to a low credit score. A low credit score is not ideal because if the business decides to borrow money in the future, chances are that institutes will deny its application. Taking a business loan will put the company on the credit system. It will also have to ensure the timely repayment of loans to improve its credit scores significantly.

How can FlexiLoans help?

FlexiLoans gives easy access to small business loans online. The company has designed a website so that one will never have to be a part of long queues or have lengthy conversations about their assets. Applying for a small business loan at FlexiLoans is quicker, simpler, more efficient, and super fast.

With FlexiLoans, businesses can spend less than weeks and weeks together to complete the documentation process. Once businesses collect all the required documents, they can upload them to FlexiLoans’ website and get the MSME loan approved within a few days. Per traditional borrowing customs, collateral is a necessary evil. But FlexiLoans offers business loans without collateral. This way, owners can keep their assets safe.


Indians often tend to avoid loans in general. They do not like being in debt. They would instead invest all their savings into the business. But taking a loan is only worth it if the benefits of a business loan are better. 

We now know that liquidating assets or using all of our savings for business might negatively impact our lifestyle. And no one wants that. This article intends to refrain from pushing anyone to get a loan. It does aim to make everyone aware of the options and break the stigma around borrowing money.


Q.1 How do I know that taking a loan will be more beneficial for me?

To determine whether a loan will be beneficial, you need to know the interest rate, repayment terms, and tax benefits you can avail of on the interest rates. You can use tools like a business loan EMI calculator or get a FlexiLoans executive to give you the complete details. You can then tally these details against your asset liquidation and determine whether a loan will be your best option.

Q.2 Is there more risk in liquidating assets?

There’s a higher risk in liquidating assets if you are liquidating a large portion of your total belongings. In the worst-case scenario of your business failing, you lose your business and most of your assets. So definitely, there’s more risk in asset liquidation.

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