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How Does a Flexi Business Loan Work?

Updated on: Jul 13th, 2021


4 min read

Businesses go through many phases and are very volatile when it comes to the cash at hand to fund the daily operations. At times, you may be held up by distributors, suppliers, and clients where you cannot go back and compel them to make your payment due to trust-related issues. No matter what reason you require financing for, Flexi business loans are at your aid. You don’t even have to worry about expensive repayments with this option.

What are the Flexi business loans?

The term ‘Flexi’ comes from the fact that the borrowers can utilise the loan amount as per their flexibility and requirement. Flexi business loans are relatively new in the market that is useful for immediate business funding requirements. A pre-set loan limit will be offered to customers. Customers can utilise the loan amount as and when required. The loan amount can be used to make an equipment purchase for your business, expand your business, to resolve capital crunch, train your employees, or to handle that sudden bulk order.

Features and benefits of Flexi business loans

  • Loan Amount: A maximum of Rs.30 lakh can be availed under the Flexi business loan scheme based on the lender you approach and your eligibility.
  • Parameter for Approval: All you need to have is a good credit score to avail a Flexi business loan. The higher your score is, the higher will be your available loan amount.
  • Truly Flexible: A Flexi business loan allows you to withdraw and prepay funds as and when required. Say you have received Rs.5 lakh loan and you need Rs.2 lakh right now to fulfil a business commitment. You withdraw Rs.2 lakh from the loan account and utilise it. The next week you receive a pending payment of Rs. 5 lakh. Then, you can repay the withdrawn amount to your loan account. You can re-borrow the amount in your loan account when you need it later.
  • Interest Calculation: You pay interest only on the amount you have withdrawn from your loan account. This will reduce the overall cost of the loan as compared to any regular loan. In the above example, you will be paying interest only on Rs.2 lakh, the withdrawn amount and not on Rs.5 lakh that was offered to you.
  • Smaller Instalments: You get the option of paying only the interest amount for the withdrawn amount as monthly instalment. You can defer repaying the principal amount along with interest keeping the actual instalment cut down up to 50%.
  • Faster Approval: Since lengthy paperwork is not involved in the loan approval process, the applications will be approved quicker. Also, you can withdraw the approved loan amount within two hours.

Who can avail Flexi business loan?

Businesses of any size who need financing for the following purposes can avail a Flexi business loan.

  • Debt management
  • Business growth and expansion
  • Working capital
  • Better liquidity
  • Equipment financing
  • Stocking up inventory

Real-life examples

Doctors can avail Flexi loan to set up their clinic and to arrange the required apparatus and equipment. A beautician can avail a Flexi loan to purchase the necessary supplies and equipment to set up a salon.

A tailor may wish to expand his tailoring training institute with more tailoring machines, different kinds of fabric, and other required items. In this case, the person can avail a Flexi loan to fund the idea.

You must know that Flexi loans are also offered for personal purposes by some lenders.

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Quick Summary

Flexi business loans offer flexibility in loan utilization, based on borrower's needs, with features like pre-set loan limits, quick approval, interest calculation only on withdrawn amount, and smaller instalments. Businesses of any size can qualify for this financing method, for purposes like debt management, business growth, working capital, equipment financing, etc.

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