There has been a significant rise in the number of small businesses in the country. A large number of entrepreneurs are coming up with innovative ideas in order to establish their own startups. Apart from an innovative idea, the other major aspect needed to successfully establish and run a business is the availability of working capital. But it has been observed that entrepreneurs find it difficult to avail credit on time. The lack of funds can affect the cash flow of the organization, thereby hampering the efficiency of the business. However, through proper research and by taking accurate measures, you can successfully fund your business idea.
Small business loans are a popular financing option for start-ups. The eligibility criteria for small business loans may vary from one financial institution to another. Most lenders will check your personal credit score, annual income, profitability and age of your business before approving your loan application. There are different types of business loans for young entrepreneurs. Let’s have a look at some of them:
- Line Of Credit
- Equipment Financing
- Angel Investment
Line Of Credit
A line of credit is an agreement between the financial institution and the entrepreneur, wherein the lender assures to lend a certain amount of money to the entrepreneur. In case of a line of credit, the loan amount can be withdrawn in small installments. The interest has to be paid only on the withdrawal amount and not the total loan sanctioned. Line of credit usually come for longer duration and has flexible repayment options. All these features make the business line of credit a popular source of funding for new businesses.
Equipment financing is used to purchase business-related equipment. An equipment loan is self-secured as the equipment you purchase serves as the security of the loan. It is possible to obtain 100% financing for the purchase of the equipment through equipment financing. Easy eligibility criteria and hassle-free application process are some of the added advantages of equipment financing.
Angel investments involve people referred to as Angel Investors. These are people with healthy reserves of cash who are keen to invest in different upcoming businesses. Apart from providing funds, angel investors also provide mentoring for businesses.
Why small business loans?
With the advancement in the banking and finance sector, availing a small business loan has become a hassle-free process. The repayment of the small business loan is done through monthly installments. With the help of an online business loan EMI calculator, you can get an estimate of your monthly installments. This can help you plan your monthly budget wisely.
Let’s have a quick look at some of the important things that you must consider while availing a small business loan:
For your fund request to be supported by a financial institution, it is essential that you have a clear idea about the purpose of availing the funds. Some of the purposes could be of hiring employees, getting new equipment, rental space, etc. You must make a note of all such business requirements before applying for a loan.
Good credit score
A good credit score can boost your chances of approval for a loan. Additionally, it also impacts the costs of borrowing by providing lower interest rates. Therefore, before applying for a business loan, you must have a clear idea about your credit scores.
Understand secured and unsecured loans
Financial institutions provide secure and unsecured business loans. Secured loans come with collaterals that are security measures to protect the financial institution in case the borrower is unable to repay the loan. Whereas, unsecured loans are collateral-free loans.
Check the withdrawal and repayment option precisely
While you apply for a business loan, make sure that its repayment doesn’t lead to financial instability in the long term. Opt for a loan that offers you the best interest rates and flexible repayment options. It is recommended to review the repayment terms carefully before applying for a loan. Bajaj Finserv business loan on Finserv MARKETS lets you avail a loan up to ₹ 25,00,000 which can be approved within 3 minutes with attractive business loan interest rates. This business loan also comes with various benefits like flexible repayment options and minimal documentation.
Use of the loan amount
Your business loan application will be approved only if you provide a valid and proper reason to the lender. An interesting business plan will increase the chances of your business loan approval.
Make sure that you provide proper documents to the lender showing the total tenure period in which your business should get furnished. The financial institution will calculate profitability, rent and many more things based on the business tenure.
With leading Non-Banking Financial Companies (NBFCs), it is possible for small and medium enterprises to avail the collateral-free start-up loan. The online application process and minimal documentation provided by a Bajaj Finserv Business Loan gives it an edge over the other financial institutions. Moreover, you can customize your business loan to suit your needs in the best possible way. Most competitive business loan interest rates and flexible repayment options are some of the added advantages of availing a Bajaj Finserv Business Loan.
So why wait? Give your vision a much-needed platform by availing a startup business loan, today.
You can also get to know the benefits of business loan.
Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!