Partnering with other businesses undoubtedly gives lucrative returns. However, if you expand your venture on your own to accrue more profits, then you will surely require financial assistance. During such times, it sounds more than tempting to liquidate investments such as shares to raise the required amount.
Despite such needs, it is more than essential to hold off the plans liquidating shares and instead using them as collateral to obtain a loan. This might sound outlandish in case you have not heard about it. In fact, there are a number of benefits of opting for loans provided by NBFCs against shares, a few of which are mentioned below -
Access to Ample Funds
On opting for loan against shares, you can get funds of up to Rs. 10 crores. With such large amount of funds, you can fund all your business related needs including constructing a warehouse, hiring workforce, storing inventory, buying equipment, and much more.
Despite offering the securities as collateral, not only do you own them, but you also continue to earn returns on them. However, you cannot redeem them until the entire loan has been repaid back.
Simple Application Process
Unlike other loans, a loan provided by NBFCs against shares does not have a stringent criteria. You just need to be above 21 years of age and hold shares, the value of which is a minimum of Rs. 10 lakhs. Thus, there is no need to worry about matching the eligibility criteria or gathering a lot of documents. Thus, you can instead focus your time and effort in expanding your project and making sure that it is set up and running smoothly.
Lastly, you can also choose to pay interest on the amount you use and not the entire corpus. You can also pay interest-only installments and repay the principal once the repayment period is complete. This is highly ideal for businesses which want to expand and can manage their cash-flow accordingly and pay the principal once the income has increased.