A NASSCOM report revealed that India ranks third on a list of the world’s largest start-up bases and this growth is only bound to increase. Even as entrepreneurs thrive and build business models based on innovative ideas, funding is the key to converting dreams into reality. Business finance can be a fitting bridge over troubled financial waters. However, if you are considering taking business finance to help your business take off, it is only necessary that you go about it the right way. Here is a step-by-step guide to getting a start-up business loan.
List your requirement
Your first step to taking a business loan must be finding out how much of a sanction you really require. From considering registration and license costs to the working capital to run your business until you break even, write everything down. Once you have a number in mind and know what it will take to start your own business without the risk of failure due to compromise, you are ready to proceed to the next step. However, ensure you don’t overborrow either as this can lead to debt that’s more than you can handle alongside running your business smoothly.
Weigh lender offerings based on your needs
While you know how much financing you need, not every lender will offer you the credit amount you desire. So, review lender sanctions and look at the other features of the loan too. By viewing multiple options, you can gain access to an affordable and high sanction. You can also choose interest-only EMIs and prepay at no extra cost! This helps you manage your cash flow better. Keeping these aspects in mind, choose the best loan offering that matches your business needs.
Ensure you are eligible
Certain lenders offer feature-packed business loans and require your business to have a vintage of at least 3 years. This may not work if you are looking to launch your business. You can also explore government-based financing via Startup India loans. One part of this scheme is Standup India, which offers loans only to women and those from SC/ST in the manufacturing, trading or services sector. Another is the Sustainable Finance Scheme that lends only to those businesses that deal with green energy or clean production. You can also opt for Mudra Loans under the Pradhan Mantri Mudra Yojana, which offers anywhere up to Rs.10 lakh based on stringent qualifications. So, make sure you check if you are eligible for the loan apart from viewing the loan’s features and benefits.
Look for a lender that has easy eligibility criteria for a hassle-free experience. Most lenders may require you to be an Indian citizen within the age of 21 years to 65 years with a good business plan. Top lenders require your business to have a minimum vintage of 3 years for a Business Loan, but also offer Personal Loans for Self-Employed applicants. This is a collateral-free source of funding that allows you to get up to Rs.30 lakh to get your business off the ground.
Have a business plan in place
In order to avail unsecured funding, you need to focus on more than just your eligibility. To show a lender that your business stands the chance of profit to repay the loan, it is important you have a well devised business plan. You will also need to state how the funds from a loan sanction will be used for the business to assure the lender that the borrowed sum will be put to good use. Remember to state the objectives of your business and mention the potential growth and profits too.
Apply in person or using the online portal
If you wish to speak to your lender’s representative in person, you can visit your preferred lender’s nearest branch. However, if you wish to apply conveniently without the hassle of queues, just apply for a business loan online.
So, keep the above in mind to ensure you apply for a business loan in the most convenient and stress-free manner. Without missing out on any important steps, you are sure to enjoy seamless processing to start your business on your terms.