Business Loans Vs. Investors: Which Is Worth It?
At IIFL, we provide loan services to both businesses and investors. Let us help you get the right funding for your needs. To know more visit us online at IIFL Finance.
Business loans are financial products that banks and NBFCs offer to business owners looking to raise immediate capital to cover day-to-day expenses, buy equipment, or for expanding the business. Lenders analyze the owner's creditworthiness through factors such as credit score and business turnover. While VC funding is a good financing option, understanding the concept of Business Loan vs. Investors are essential.
How Do Business Loans Differ From Investors Investments?The primary distinction between business loans vs. investors is that a business loan is a credit facility where the lenders such as banks and NBFCs provide capital to business owners, whereas the investment from investors is an ownership deal.
When investors provide capital to the business owners, they have to sell a stake in the company to the investors against the invested capital amount. Unlike investments, business loans do not require business owners to give up a stake in their company. All they have to do is repay the loan over time through flexible EMIs within the loan tenure of the business loan.
Benefits Of Business Loans Over InvestorsBusiness owners prefer to take a business loan to raise capital but look towards investors for investments if the need for capital is substantially higher. However, business loans remain the preferred choice of business owners in investment vs. loans because of the following benefits.
• More Control:In the case of VC funding from investors, the business owners have to sell their company stakes, which forces them to have lower control. On the other hand, business loans do not require selling a company stake but only the repayment of the loan amount over time, thereby giving better control over the business.
• Nominal Interest Rates:Business loans have attractive and affordable interest rates without unnecessary or hidden costs. The nominal interest rates on a business loan ensure that the business owners can pay the amount without creating a future financial burden because of the loan repayment liability.
• Immediate Capital:Investments from investors can take months to get finalized. On the other hand, if business owners avail of a business loan from quality lenders, it only takes 30 minutes for approval and 24-48 hours for the loan to be disbursed into the bank accounts.
Avail Of An Ideal Business Loan From IIFL FinanceIf you want to raise capital without giving up control of your business, you can take an ideal business loan from IIFL Finance. Now that you have understood where you should raise capital, a business loan or an investor, IIFL Finance can be the ideal choice. The business loan does not need collateral and offers instant funds up to Rs 30 lakh with a quick disbursal process. The application process is entirely online with minimal paperwork with attractive and affordable interest rates to ensure the repayment doesn’t create a financial burden.
Q.1: What are the benefits of IIFL Finance business loan?
Ans: The benefits of an IIFL Finance business loan include:
• Instant loan amount up to Rs 30 lakh
• An easy and online application process
• Instant credit of loan amount to your bank account.
• Affordable EMI repayment options
Q.2: Can I use the loan amount to invest in any type of business?
Ans: Yes, you can use the loan amount offered by IIFL Finance through its business loans to invest in any type of business. However, it should be used for business purposes.
Q.3: Do I need to offer company shares to IIFL Finance against the business loan?
Ans: No, you do not need to sell a stake in your company. IIFL Finance business loans need to be repaid with interest within the loan tenure.