Used wisely, a business loan can serve as a lifeline for small and medium-sized businesses (SMEs) that are in need of capital. Taking out a loan enables an enterprise to receive a lump sum that can then be used for a variety of purposes, including expanding physical infrastructure, investing in new technologies, or increasing production capacity. At the same time, though, taking out a business banking loan is a significant responsibility that can impact your enterprise’s bottom line. Here’s a list of the different ways in which your cash flow can be affected by a loan:
Business Loans Provide Immediate Cash Inflow to Fund Operational Needs
Taking out a business loan, such as a Maya Flexi Loan offered by Maya Business, injects a much-needed immediate cash inflow into your SME’s operations. You can unlock up to PHP 2 million in additional funding that you can even divide into separate loans. This influx of funds provides the financial flexibility you might need for various purposes, such as setting up a new branch, purchasing equipment, or addressing short-term working capital needs. This initial boost can empower your business to seize growth opportunities and navigate challenges that might otherwise hinder your enterprise’s development.
To demonstrate, take the example of a furniture manufacturing business that is poised to benefit from the current increase in demand for eco-friendly home furnishings. To maximize this opportunity, the enterprise must scale up its operations. This is an endeavor that requires a substantial upfront investment in new equipment, skilled labor, and sustainable materials.
A business loan that is tailored to the company’s needs can provide the capital to fuel this expansion. With additional funds from a reliable financial services provider, the enterprise can shoulder the cost of acquiring state-of-the-art machinery, hiring new workers, and adopting sustainable material sourcing practices. Alternatively, the additional capital can be utilized to diversify the company’s product offerings and increase its brand appeal to different markets. These are just a few of the ways in which a loan can be used to sustain a business, fuel innovation within the company, and positively impact growth trajectory.
Business Loans Offer Financial Stability through Predictable Payments
It’s worth noting that while loans for businesses provide immediate financial relief when necessary, these financial products also require consistent repayments that can put a strain on your company’s cash flow. These repayments typically come in the form of monthly or quarterly installments.
Repaying a loan is a responsibility that businesses should be prepared for. Prior to applying for a business loan from a trusted lender, you need to meticulously plan for your repayment strategy. It’s of utmost importance to meet your financial obligations with your lender while ensuring that you do not compromise your enterprise’s operational expenses and other financial commitments.
On the other hand, having the opportunity to pay off a loan in regular installments can also be seen as an advantage. Securing a business loan with a fixed interest rate, a structured payment term, and borrower-friendly fees like Maya Flexi Loan enables you to gain a clear understanding of your financial responsibilities for the foreseeable future. Because you can accurately predict the amount you have to pay your preferred business loan Philippines provider every month or quarter, you are better equipped to come up with a realistic budget for your business. This predictability allows you to allocate funds for loan repayments without being caught off guard by sudden changes in interest rates or payment amounts. An organized and sustainable cash flow, in turn, is made more accessible to your business.
Business Loans Can Help You Build a Positive Relationship with Lenders
Using financial products like business loans presents your enterprise with the means to build a relationship with banking and financial services providers, which can be a practical resource in the future. By borrowing mindfully and making timely repayments, you can build up your small business’s creditworthiness or suitability to receive credit. These actions demonstrate to your current and future financial services providers that the company you lead is financially reliable and responsible. Improving your credit standing in this way opens doors to financing opportunities with better terms, such as lower interest rates and higher borrowing limits.
By being a responsible borrower, you can foster your company’s relationship with banks and financial services providers. This, consequently, will make it much easier for your SME to find partners and lenders for funding strategic investments and expansion in the future.
Business Loans Can Positively Impact Your Profitability
It’s a must for entrepreneurs to invest borrowed funds wisely to generate returns and ensure that the cost of the loan doesn't outweigh the benefits. By strategically investing borrowed funds in areas such as expansion, innovation, or operational improvements, entrepreneurs can ensure increased revenue streams and better overall business growth. It's imperative to conduct a thorough cost-benefit analysis to ensure that the returns from these investments surpass the cost of the loan, thereby creating a positive impact on the company's bottom line. This strategic approach to leveraging borrowed capital can pave the way for sustained profitability and long-term financial success. Striking this balance is essential for sustaining a profitable and financially stable enterprise.
By understanding these facets of how business loans affect cash flow, your enterprise can quickly and confidently commit to decisions of when and how to best leverage financing options.
Are you planning to take out business banking loans in the near future? In that case, now would be a good time to start sign up for Maya Business and build a meaningful business relationship with us.
Joining Maya Business unlocks the benefits of the Maya 1-2-3 Grow bundle. This special offer lets you enjoy a merchant discount rate (MDR) discount of 1% on all QR Ph payments for 3 months upon onboarding. This translates to PHP 14,600 in savings for every PHP 1 million worth of QR Ph sales. Plus, you can also take advantage of opening a Maya Business Deposit account and using it as your settlement account. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit.
For those seeking additional funding for their business, the best benefit of the Maya 1-2-3 grow bundle is that it qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months–the perfect solution if you’re looking for funds for the expansion of your operations. Just use Maya as your primary processor for all wallet and card payments. The more you use Maya, the better the loan offer. Explore what Maya Business has to offer and discover how we can help you build up your budding business.
