Introduction
Applying for a business loan is one of the ways a small business owner could expand their business to the next level. Having a GST filing and applying for a business loan will act as one of the solutions when a business owner is looking for financial support in terms of expansion, purchase of inventory, or even working capital. Wherein the funds could be availed instantly based on the tax filings by the applicant.
The below article will explain to you in detail the benefits of getting business loans with GST.
What is the GST Business Loan?
A GST business loan is a kind of financing product, developed and structured for businesses that have their registration under the Goods and Services Tax (GST) regime in India. This financing product provides the business’s GST returns as one of the eligibility parameters and makes the borrowing of funds hassle-free. Unlike traditional business loans, which require a load of documentation and collateral, a GST business loan is the ideal solution when looking for financial support in terms of expansion, purchase of inventory, or even working capital, wherein funds could be availed instantly based on the tax filings by the applicant. It is a new method of financing, which not only makes the process of loan approval easy but also makes sure that the business is in a position to raise the required funds quickly with better terms from the banks and NBFCs.
Benefits of getting a Business Loan with GST.
Easy and Speedy Accessibility and Approvals: Mostly the primary benefit of the GST is its easy accessibility for any financial support. Since the application for the loan is based on the GST returns, no tedious paperwork is required to back it up. In fact, through the returns, a lender can easily check on the financial health and the amount of revenue generated by the business unit. Based on this information, sanctioning and disbursement can happen at a faster rate. This speed is much needed for those businesses that need immediate funds to either expand their market opportunities or deal with cash flow problems.
No Collateral Required: Many of the traditional business loans from financial institutions like banks require collateral, which is an issue for most small businesses. Most of the loans available against a GST are collateral free business loan options. This feature makes it easier to get financing for SMEs that may not have assets or collateral.
Better Loan Terms: Lenders like banks and NBFCs will treat GST returns as an indicator of business performance. The consistency and good maintenance of GST returns will help get better loan terms for interest rates and higher loan amounts, and this will cut down the cost of borrowing and provide more stable financial support to the business.
Flexibility in the Usage of Loans: Filing GST for the business can bring flexibility in the usage of the borrowed business loan amount. Whether it be purchasing new equipment, managing operational expenses, investing in marketing, or expanding operations, the loan can be spent according to the need and choice of the business. This kind of flexibility helps a business in fulfilling its different financial needs without necessarily applying for multiple loans.
Improves Business Credit Score: If the business owner files the GST regularly this can improve the credit score of a business. The better the credit score, the greater the possibility of accessing more significant financial products and enjoying better loan terms in the future. If a company can prove it’s capable of managing and repaying loans, it will build a robust credit history that is very good for its long-term financial health.
Transparency and Accountability: The GST framework naturally encourages transparency and accountability in business transactions. At the time of sanctioning a business loan, the sanctioning process involves clear inspection of the GST returns, which represent genuine business transactions. It is this transparency that ensures that only such businesses having a good financial track record can access such loans and therefore reduce the risks for the lender, and at the same time promote responsible borrowing.
Conclusion
GST business loans represent one of the most innovative financing solutions, specifically aimed at businesses falling under the regime of GST in India. They bring along many advantages, which include easy accessibility, no requirement for collateral, better loan terms, and flexibility in usage. Moreover, they bring about financial discipline and transparency that have an immense potential to build up a business credit score. In such a competitive market, with the help of a GST business loan, SMEs can easily raise funds as and when required.
In case you are already filing GST for your business, and are in urgent need of some financial help, NBFCs would be the best option, since they basically consider your inclusion on your GST documents in giving business loans. Such loans have considerably friendly terms, therefore making it easy for you as a business owner to obtain the necessary funds.