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Selling Assets Versus Sme Loans: Which Is The Better Option?
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A business may be in need of some resources to expand or to just meet its expenses. What should a business owner do in such a scenario? Should he sell off his assets to raise money or should he take a loan for his business from the bank? The safest and the easiest way for the businessman would be to avail a loan. SME loans can be availed by small and medium-sized businesses. An asset is something that belongs to a person and can include real estate, gold, jewellery or any other material thing that has some value in the market. Selling off an asset can provide a person with the necessary resources to take care of his/her business. But losing an asset can prove to be a bad financial gamble as the value of assets (particularly fixed) tends to increase with time. You also have to face the problem of replacing the asset sold once you have dealt with your financial constraints.
The various benefits of SME funding are as follows:
• This loan is basically a business loan that can be used to increase revenues or to get an upper hand on a competitor. If you can utilize the loan efficiently, your business is bound to become profitable. You can use this profit to pay off the loan, and you will also be left with some surplus income. This is better than selling off your asset as replacing it might take a lot of time and effort.
• Finance companies in our country are specifically catering to the needs of start-ups and SMEs. The government is also supporting entrepreneurs and encouraging them to expand their operations. Thus there is a massive scope for funding of new businesses and expansions. In this scenario, the loan process has become simple, fast and hassle-free.
• Banks are offering customized solutions to SMEs that are applying for loans. You are being given a chance to choose whether you want a loan for a short term or for the long term and how many loans you require. Repayment options have also been made flexible to meet the requirements of the business. Thus banks are offering unique loan features to meet the needs of SMEs in India.
• Banks are providing SME loans without you having to pledge a property or asset. This has made it very convenient to avail such loans without worrying about which asset to mortgage. Normally banks and financial institutions are providing these loans to businesses that have been successfully operating for at least a year.
• Furthermore, banks are indulging in SME funding by keeping the interest rates competitive and are charging nominal processing fees.
Thus, due to the above factors, it is better to avail an SME loan than selling off your assets. If you are planning to have a safe and sound financial future, availing a loan will prove to be much more beneficial in the long term.
Author Bio: Manish Damani, a financier by profession, loves to write during his spare time. He combines both his interests, by dispersing financial related information whenever possible. Through his work, he has provided information on which is the better option: SME loan or selling off assets.
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