Why Should You Choose a Secured Business Loan in 2025

Lower interest rates = Lower cost of borrowing

Business loans can be tricky, picking the wrong ones can drain your savings and profits into EMIs. Secured business loans offer better interest rates which translates to lower cost of borrowing, in turn, increasing your profits. How, you ask? Simple, your payable EMIs against your loan go down, which can then be saved as a part of profit.

And why does it happen? Again, simple. You pledge a collateral like a house, expensive machinery, or inventory. These collaterals help banks realize that if, by chance, you default on EMIs, it can be recovered through these collaterals.

Higher loan amounts for bigger growth plans

Business growth will always require monetary input as it is a function of bigger space, more inventory, and maybe equipment and machinery. While short-term goals can be met with healthy cashflow, you will need higher sums to meet your long-term goals.

As a business we always dream of expanding our operations or investing in cutting-edge equipment, right?

Secured loans can make those dreams a reality. By leveraging your assets as collaterals, you can access significantly larger loan amounts. Lenders are more comfortable offering large sums when there's a tangible asset as security.

For instance, with a product like Ambit Finvest Vyapar Loan, you could potentially access funding up to ₹50 crore. That's a game-changer! Unsecured loans often come with much lower caps (ranging around ₹1-2 crore), limiting your growth potential.

Longer repayment tenure = Easier cash flow management

Secured business loans usually come with a longer repayment tenure. The reason is that you can get a bigger loan for a longer tenure, as compared to an unsecured business loan.

Longer tenure with fixed payments can help manage your cash flow better. Longer tenures mean lower EMIs, reducing the strain on monthly cash flows and providing financial flexibility.

Once you are aware of your commitments or rather fixed commitments like EMIs, rent etc. you are in control of your business in a real sense and all strategies revolve around closing these commitments first.

Sustained investments help in capitalizing emerging trends like infrastructure growth.

Easier approval process, even with moderate credit history

Building a solid credit history takes time, and sometimes, even promising businesses might face challenges securing funding. Collateral reduces the risk for lenders, making approval seamless. Even if your credit score isn't perfect, your assets can speak volumes. Ambit Finvest, for example, has streamlined its process to make secured loans more accessible.

What can be used as collateral? Property, equipment, fixed deposits and inventory are common forms of collateral.

Tax benefits: Save while you borrow

Did you know that you can potentially claim tax deductions on the interest paid on secured business loans? Under Section 36(1)(iii) of the Income Tax Act, you might be able to deduct interest payments. Plus, if you purchase depreciable assets with your loan, you can claim depreciation. Let's say you take a secured loan to buy new delivery vehicles. The interest you pay is deductible, and you can also claim depreciation on the vehicles, boosting your ROI.

Let's do a comparison!

Conclusion

A secured business loan is like a strategic financial tool to help you achieve the right business outcome. It comes with lower interest rates, larger funding amount, and tax benefits. Invest in the right equipment, right talent, and in the right place to ensure that you can manage the EMIs comfortably.

Frequently Asked Questions