Is it a good idea to take a small business loan during the festive season?

Small companies must prepare several months in advance to make the most of the holiday mood of the customers. If companies prepare for the festive season beforehand, then it will be easier to meet consumer demand and boost sales. Just before the festive season starts, small business owners who want more funding to grow can think about obtaining a loan. Many lenders are offering business loans to help small companies capitalise on the holiday rush.

When looking to finance a small business, several loans are available such as a working capital loan, term loan, secured loan and many more. These loans may be used for many tasks such as funding for day-to-day operations, expanding your business, or updating the infrastructure. Small firms can access business loans from banks and NBFCs as per their needs.

Read on to learn how business loan terms can impact your company during the holiday season.

How to Use Business Loans?

Here are some of the ways for you to use business loans for your venture: –

Replenishing Stock

Since the holiday season falls at a time of higher customer demand, retailers must stock up in advance to be ready for the increased demand. Before the start of the festive season, they have a lot of money tied up in the stock. This has the potential of having a big impact on the turnover cycles and cash flows of the company.

It’s possible that taking out business loans will be good for reducing the frequency with which small businesses run out of cash. This has become a crucial aspect of modern times since there is a rise in the number of small firms vying for clients’ attention with new products. Hence, you can also get a small business loan, get new and updated products, and attract more customers for higher profits.

Investing in New Equipment

During festivals, you may need to invest in new machinery and tools to keep up with demand. You might have to pay for maintenance and repairs out of your pocket if you want to see an increase in output. With a small business loan, you can easily meet your money needs.

Keeping the Operations Running

Before the holidays, it can be difficult for small companies already strapped for cash to spend more money on running expenses. This is especially true for retail and food service companies. This is because a lot of resources must be spent on storing products and equipment.

If your business can get a loan, you can direct all of the efforts for growth rather than worrying about ensuring the current level of operations.

Refinancing might be an option worth considering if you are working to minimise the debt you carry. Many small companies borrow money from unregulated lenders at high-interest rates to meet the expected demand during the holiday shopping season. As a result, you can build up a large credit card debt in preparation for the festive season.

In circumstances like these, obtaining business loans for your company is a good option. Most banks and NBFCs offer small business loans at low-interest rates. You can use this option to take care of your needs for money without going for high-interest loans.

Marketing and Public Relations in the Organization

During the festive season, customers always look for the best offers. Hence, it is more vital than ever before for small companies to get the top-of-the-mind space in the minds of the people they are trying to sell to. At this time of year, you have the ideal opportunity to bring in new clients while also improving your ties with your regulars.

When businesses take out loans, part of their funds might be put into marketing efforts. By doing so, you can enhance your profile, publicise more products, and draw the attention of potential clients.

Getting Latest Tech  

Several companies have automated their procedures by adopting the technologies. During the busy festive season, you can obtain useful details on the preferences and routines of the customers. Applying machine learning (ML) and data analytics offers the potential for your company to improve the quality of customer service.

Due to the high cost of integrating the latest tech, a small or medium-sized firm (SME) can benefit from a business loan to pay for such costs.

Online Marketing

You must invest money to market your venture through digital and social media marketing. It is easier for micro, small, and medium-sized businesses (also known as MSMEs) to market their promote their products and services through a website. In addition, it enhances the reputation of the business, which is vital for a new business looking to establish a strong presence in the market.

Exemptions from the payment of taxes

The Income Tax Act allows for the interest paid on loans to be deducted by firms. During the festive season, a small business could pay less in taxes with these benefits. Small businesses are eligible for certain tax breaks if the revenue is under a given limit. In addition, the firm’s financial stability is safe from a sudden need for cash to pay taxes.

Conclusion

The expense of creating a robust online platform could be out of reach for certain ventures. However, micro, small, and medium-sized enterprises should invest in this avenue since doing so will help attract more customers, which in turn may increase sales. A business of any size can apply for a business loan to help grow its online presence. Piramal Finance is a leading NBFC in India that offers business loans at low-interest rates. You can use this money for various needs of your business and boost your profits.