{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.indusind.com\/iblogs\/business-loan\/online-business-loans-things-to-know\/#BlogPosting","mainEntityOfPage":"https:\/\/www.indusind.com\/iblogs\/business-loan\/online-business-loans-things-to-know\/","headline":"Business Loan & Taxes – Things to Know!","name":"Business Loan & Taxes – Things to Know!","description":"Businesses\u00a0and entrepreneurship are the life and blood of the Indian economy. Everything from your neighbouring retail store to the dealer you purchase your car from are all businesses. While some businesses sustain their own cash flow, a new or expanding business may require capital from external sources to reach a stage of sustaining itself. This...","datePublished":"2024-12-05","dateModified":"2024-12-05","author":{"@type":"Person","@id":"https:\/\/www.indusind.com\/iblogs\/author\/vinayak\/#Person","name":"Vinayak","url":"https:\/\/www.indusind.com\/iblogs\/author\/vinayak\/","image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/83880c90630f0d98ec7d461acb74bdf6?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/83880c90630f0d98ec7d461acb74bdf6?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"IndusInd","logo":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","width":201,"height":86}},"image":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/8-13.jpg","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/8-13.jpg","height":288,"width":764},"url":"https:\/\/www.indusind.com\/iblogs\/business-loan\/online-business-loans-things-to-know\/","about":["Business Loan"],"wordCount":921,"keywords":["business loan","business loan & taxes"],"articleBody":"Businesses\u00a0and entrepreneurship are the life and blood of the Indian economy. Everything from your neighbouring retail store to the dealer you purchase your car from are all businesses. While some businesses sustain their own cash flow, a new or expanding business may require capital from external sources to reach a stage of sustaining itself. This can happen across business sizes – whether small, medium, or large. Typically, the reason to raise capital dictates the amount you may seek in business loans.Types of Business LoansBroadly, the two types of business loans are secured and unsecured. A secured loan is taken against an asset as collateral while an unsecured loan is taken without offering an asset as collateral. Since banks view secured business loans as safer, they usually charge a slightly lower interest rate on them when compared to an unsecured business loan.Also Read: Know The Suitable Options For Quick Business LoansYour Business Loan Offers Other BenefitsYou can get an online business loan conveniently from your bank or even from a Non-Banking Financial Corporation (NBFC). Often, a business loan for a small amount can be disbursed quickly to your bank account from an institution that has reviewed the cash flows from your business.Apart from meeting your cash flow needs and covering your expansion or capacity building expenses, there is a tax incentive to taking a business loan. Since businesses generate employment and add value to the economy, they often offer tax deduction possibilities. This benefit makes an online business loan a more efficient vehicle to finance your business.How To Account For A Business LoanWhen it comes to the accounting of a business loan, there are a few things to keep in mind. When you receive a business loan, the amount you receive it for is called the principal. The cost to borrow the principal amount is the interest component of your business loan.While the principal is a cash flow into your business, it is not considered income. Only net income, that is income after meeting expenses, is considered taxable. The interest paid to the bank for your online business loan is accounted for as an expense, and therefore it reduces the taxable part of your business income. This means that a business loan reduces the amount of tax you pay by increasing your business expenses.Let\u2019s explore this with an example. Imagine you take a loan for \u20b9 10 lac at 12% annual interest. Roughly, the interest component for this loan would be \u20b9 1,20,000.The \u20b91,20,000 interest you pay to the bank will reflect in your accounts as an expense. This will reduce the net income of your business and make it a smaller taxable amount. At the same time, \u20b910 lac you receive to meet your business needs will be at your disposal without any tax obligations for this amount.A business loan strengthens your balance sheet and can be used to great effect. It can expand and grow your business as well as build a credit relationship with banks and other financial institutions while also reducing your tax liability. It expands the possibilities of your business with cash in hand at a rate of interest that is lower than you pay.Conclusion-If you are considering taking a business loan, remember to account for its direct and indirect benefits. The convenience of receiving a loan, its tax incentives, and the ways in which it strengthens your balance sheet and business possibilities are clear advantages for someone who has the opportunity to grow or expand their business.If your business is more than 2 years old, explore IndusInd Bank Quick Business Loans hereDisclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct\/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.Share This:"}