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How to Use Your First Business Loan Effectively for Business Growth?


Business loans aim to give businesses easy access to capital to execute business plans in a short amount of time. When applying for a business loan, most lenders ask for a detailed report from the borrower on how the business loan will be used. The loan will be sanctioned only if the lender is convinced about the effective use of the business loan. Therefore, before applying for a loan for business growth, the borrower must have a clear idea about how the funds from the business loan will be used.

Shriram Finance offers business loans at affordable interest rates. The interest rate for business loans starts at 15%* p.a. with flexible repayment tenures from 12 to 60 months. Minimal documentation, quick approvals and disbursals are some of the other features of business loans offered by Shriram Finance. Furthermore, borrowers can apply for a business loan online through an easy online application process. Apply now for a business loan!

Key Highlights

  • When a business loan is granted, initial steps should be taken by the business owner to ensure that timely repayments are made and that there is enough money for each EMI.
  • When applying for a business loan, most lenders ask for a detailed report from the borrower on how the loan amount will be used. The loan will be sanctioned when the lender is convinced about the purpose of the business loan.
  • Business loans help companies keep the cash flow intact, expand a business, procure new equipment or have emergency funds for future business operations.
  • Business owners can use the business loan amount to improve the business's presence in the digital world, including investing in digital marketing.

How to Use a Business Loan for Business Growth?

Following the disbursement of a business loan, there are some important points to remember. Initial steps should be taken to ensure that timely repayments are made and that there is enough money for each EMI to be paid. The business loan EMI calculator will help business owners keep track of monthly instalments and pay EMIs on time. This protects the credit score of the borrower.

Once this has been done, entrepreneurs can start using a business loan for various aspects of their business. There are several ways one can make good use of a loan for business growth. Here are a few ways to use a business loan wisely:

1. Cash Flow Purposes

To run business operations smoothly, an individual needs constant cash flow. Meeting the capital requirements through a business loan is a wise option in many instances, especially if the business is seasonal or has many accounts receivable. Managing urgent and immediate financial needs through business loan is a good option for many entrepreneurs. Shriram Finance offers instant business loans with flexible tenures.

2. Business Expansion

To stay in business for an extended period, businesses must introduce new products and services that meet constantly evolving customer demands. Diversifying into new geographical areas is also necessary for business expansion. In the long run, these business expansions can generate good profits. But practically accomplishing them is challenging as these processes require finances. Once a business loan has been disbursed, owners can utilise the loan for business growth and expansion.

3. Building Inventory

Effective inventory management is crucial to a business's success. It prevents shortages and ensures that a business's goods are in stock. If businesses fail to restock in-demand items on time, customers may go elsewhere. This could, in turn, severely impact the success of the business. Funds from a business loan can be used to purchase goods and services that the business relies on to generate revenue. Purchasing new-and-improved goods and services with high market demand also serve towards widening the customer base.

4. Upgrade Equipment

To keep pace with rapidly evolving technological changes, businesses must constantly upgrade machinery, equipment or IT infrastructure. The failure or inability to do this may result in producing sub-par products or services. Upgraded equipment, machinery or devices can improve not only product quality but also staff efficiency. It also helps businesses stay a few steps ahead of competitors. Businesses that use the funds from a business loan to upgrade equipment or technology can provide better or newer services to customers. SME business loans can help businesses scale up production and take on more clients, for example.

5. Marketing and Advertising

Good marketing and advertising help businesses increase awareness among potential customers about products and services. Reaching more people will help the brand grow substantially. A good marketing strategy requires expert planning, such as analysing data and the market to target the right audience. Business owners can take advantage of business loans to fund marketing activities such as advertisements, promotional offers and other activities to increase the business's brand visibility. Using business loan funds to meet marketing costs helps businesses implement effective strategies and foray into new markets.

6. Digital Marketing

With increasing digitalisation, more businesses are increasing digital marketing budgets. Digital marketing allows companies to reach a broader range of people compared to the conventional route. With the funds from a business loan, business owners can hire digital marketing professionals or agencies to improve the business's online presence. This can include improving features on the website and using social media platforms to both engage with potential customers as well as promote products and services.

7. Pay Off Debt

Usually, businesses may have more than one debt obligation. Managing multiple loans is often difficult and places a heavy financial burden on the business. Entrepreneurs can use the business loan amount to pay off debts, especially those that have high interest rates. This strategy often helps businesses save money and have extra funds to use for business growth.

8. Emergency Fund

Having cash reserves allows businesses to benefit from various opportunities and potentially improve business operations to stay ahead of the competition. It also helps companies to avoid taking loans during difficult economic conditions when interest rates are high. While businesses can use a business loan to create emergency funds, proper planning and good revenue visibility are necessary before executing this strategy.

Summing Up

There are multiple ways to use a loan for business growth. How an entrepreneur will utilise the loan amount depends on the nature of the business and the sector. For instance, retailers can use a business loan to add to the inventory, while a service-oriented business can use it for marketing purposes, including digital marketing.

Shriram Finance offers different types of business loans that are based on very specific needs. Businesses can take out equipment loans, working capital loans, startup loans, loans for women entrepreneurs and more. Businesses that have been in operation for more than 3 years can apply for Shriram Business Loan. Apply now to go through the different loans available and begin a business loan online application today!


  1. What are small business loans?

Small business loans are designed to meet the fund requirements of small and medium businesses. Funds raised through small business loans can be used for many purposes such as increasing cash flow, business expansion, buying new machinery, creating inventory and more.

  1. Who is eligible to apply for Shriram Business Loan?

Individuals (business owners, professionals and those who are self-employed) are eligible to apply. Businesses that are partnership or proprietorship firms, and private and public limited companies that have been in business for a minimum of 3 years are also eligible to apply.

  1. What is the maximum amount I can take as a business loan?

The maximum business loan amount for Shriram Finance business loans depends on the credit score of the borrower and can go up to ₹30 lakhs.

  1. Is a good credit score required for business loans?

The borrower's credit score plays a vital role in the approval process of the business loan. Lenders decide the maximum loan amount, depending on the borrower's credit score. A good credit score for Shriram Business Loan is between 700 to 900.

  1. How can I apply for a Shriram Finance business loan online?

Borrowers can apply for a Shriram Finance business loan online by following these steps: visiting the Shriram Finance business loan application page, entering the personal and business-related information and completing the verification process. Once the application gets approved, the loan amount will be disbursed.

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