{"id":10133,"date":"2020-06-17T07:40:32","date_gmt":"2020-06-17T07:40:32","guid":{"rendered":"\/blog\/?p=10133"},"modified":"2020-06-26T07:10:31","modified_gmt":"2020-06-26T07:10:31","slug":"why-should-you-prefer-business-loans-over-microloans","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/loan-for-business\/why-should-you-prefer-business-loans-over-microloans\/","title":{"rendered":"Why Should you Prefer Business Loans over Microloans?"},"content":{"rendered":"\n

When\nit comes to funding a business, there are different types of financial\ninstruments available. However, one of the biggest dilemmas most business\nowners encounter is the choice between a business loan and a microloan. While\nboth seem like good options, microloans can come with some limitations. To make\na better decision, it is essential to understand how business loans and\nmicroloans work.<\/strong><\/p>\n\n\n\n

Additional Read – <\/strong>10 Benefits of Taking a Business Loan<\/a><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Here\nis a comparison guide to help you understand why you should choose business\nloans over microloans: <\/p>\n\n\n\n

Major\ndifferences between a business loan and a microloan<\/p>\n\n\n\n

\n  \n <\/td> Business Loans <\/strong><\/td> Microloans  <\/strong><\/td><\/tr>
\n Loan Amount\n <\/td>\n You can apply for business loan up to a sum of Rs. 75\n lakh. The loan amount for business loans is comparatively higher, which makes\n them ideal for bigger companies.   \n <\/td>\n Microloans, on the other hand, offer a smaller\n capital. As the name suggests, these loans typically offer lower values of up\n to Rs.1 lakh. They can be inadequate for funding a business. \n <\/td><\/tr>
\n Loan Tenure\n <\/td>\n An instant business loan offers a comfortable tenure\n ranging anywhere between 12 and 36 months. \n <\/td>\n Since the loan amount for microloans is quite low,\n they offer a smaller loan tenure. This can make it tougher to repay the\n loan. \n <\/td><\/tr>
\n Rate of Interest\n <\/td>\n You can expect a competitive business loan interest\n rate when opting for these loans. With long tenures and considerable loan\n amounts, lenders generally offer affordable interests. \n <\/td>\n The loan tenure and amount are much smaller. Lenders,\n hence, tend to charge higher interest rates to make more profits. \n <\/td><\/tr>
\n Use of the Loan\n <\/td>\n Lenders allow you to use a business loan as you like.\n It can be spent on refinancing, purchasing new equipment, or hiring. There\n are no restrictions and interference from the loan provider.\n <\/td>\n You have a limited scope of utilization with\n microloans. The lender may only allow you to use the money for the intended\n purpose and in no other way. \n <\/td><\/tr>
\n Suitability \n <\/td>\n Any company, big or small, can use a loan for\n business to finance its capital needs. The loan amounts suit every\n enterprise\u2019s requirements, and the flexible tenures and attractive rates of\n interest make it easy to settle the loan with time. \n <\/td>\n Microloans, however, may be suitable for only small\n businesses. The loan amount is very small at Rs. 1 lakh. Moreover, these\n loans are not flexible in terms of their use, tenure, and interest. \n <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Additional Read – <\/strong>Tips for Getting your Business Loan Approved in First Attempt<\/a><\/p>\n\n\n\n

Conclusion <\/strong><\/p>\n\n\n\n

The\nultimate decision to choose between the two lies with you and will depend on\nyour company\u2019s needs. However, when you look at the overall costs involved in\nboth these loans, opting for a business loan<\/a> can be a better deal. It\noffers better features and usability at a more affordable cost. It is also more\nreliable as business loan lenders are big and reputed banking companies and\nnon-banking financial companies (NBFCs) as opposed to small non-profit organizations\nthat offer microloans.<\/p>\n\n\n\n

If you are looking for quick business loans, reach out to Tata Capital. With a tenure up to 36 months, Tata Capital offers loans for up to Rs. 75 lakh.<\/p>\n\n\n\n

Check Interest Rates & Charges<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

When it comes to funding a business, there are different types of financial instruments available. <\/p>\n

Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":10135,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[26],"tags":[],"class_list":["post-10133","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan-for-business"],"yoast_head":"\nBusiness Loans Vs Microloans - Which one to Choose?<\/title>\n<meta name=\"description\" content=\"Confused between business loans & microloans? 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