The startup culture has taken over the world. More and more people are showing interest to start their businesses. The recent growth that the startup world has experienced is immense and it is not going to stop anytime soon. However, beginning a startup means needing one of the most significant things and that is investment or funds. Without finance, a business cannot happen.
People who launched their businesses search for finance as they need funds to grow their companies. Businesses make money by borrowing cash. So, there are banks that willingly provide loans to small businesses. In this article, we will talk about some of the banks from which you can take loans and their eligibility criteria, and the documents that are needed. So let’s get started.
Is It an Ideal Idea to Get the Loan Offered by Bank?
Acquiring Loans from Banks for a startup with a futuristic approach is always a good idea. Loans are regarded as a better source of capital for a gainful business than share capital as you get to have better leverage. You can enjoy a surplus of the rate of return over the interest you pay for the borrowings. To begin with a startup, you need to be very well aware of how to keep your interest rate as low as possible with maximum benefits.
Loans enhance the scope of your business by aiding you in expansion as well. On the other hand, it also acts as a catalyst to motivate you for better productivity. You can avail these advantages of acquiring startup loans-
You can get a boost to develop an even stronger business plan.
You can effectively manage the flow of money.
Higher rate of return on capital.
List of Best Banks for Small Business Startup Loans
Many banks offer loans to small businesses so that entrepreneurs can fulfill their dreams of running a business. However, the most popular banks that offer loans and are favored the most are listed below, they are:
HDFC Bank Business Loans
HDFC Bank Business Loan
Startups can expand their operations by obtaining additional financial assistance through HDFC bank. Every entrepreneur wants to have the least amount of documents, flexible tenures as well as low-interest rates, which you can get from HDFC. The bank offers loans to fulfill related funding. any kinds of business requirements
Loan Amount and Tenure
The Business loan amount is up to INR 40 Lakhs and even INR 50 Lakhs in selected places.
Loan Tenure is 12 months to 48 months.
Eligibility
Entrepreneurs, Proprietors, Private Ltd. Co., and Partnership Firms involved in the business of Manufacturing, Trading, or Services.
The business has a minimum turnover of Rs. 40 lakhs.
Individuals who have been working for at least 3 years with a minimum of 5 years of working experience in the field.
Business involved in profit-making for the past 2 years.
A business must have a Minimal Annual Income (ITR) of at least Rs.1.5 lakhs per year.
The applicant must be at least 21 years when they apply for the loan, and not older than 65 when the loan’s maturity.
Documentation
If you are interested in a business growth loan, then you can apply for it using the following paperwork.
Mandatory Documents [Sole Prop. Declaration or Certified Copy of Partnership Deed, Certified true copy of Memorandum & Articles of Association (certified by Director) & Board resolution (Original)]
A copy of any of the following documents as identity proof:
Aadhaar Card
Passport
Voter’s ID Card
PAN Card
Driving License
3. A copy of any of the following documents as address proof:
Aadhaar Card
Passport
Voter’s ID Card
Driving License
4. Latest ITR along with computation of income, Balance Sheet, and Profit & Loss account for the previous 2 years, after being CA Certified/Audited.
5. Proof of continuation (ITR/Trade license/Establishment/Sales Tax Certificate).
6. Bank statement of the previous 6 months.
Interest Rate & Charges
The interest range for Rack is between 10% to 22.5%.
Loan Processing Charges – Up to 2% of the loan amount. NIL Processing Fees for loan facility up to ₹5 Lakhs availed by micro and small Enterprises subject to URC submission before disbursal
Benefits
You don’t have to submit any collateral or security for taking a loan from HDFC.
The process of applications is very simple.
Least amount of documentation.
Doorstep service is available in this bank.
An additional feature is access to the overdraft facility. You pay interest only on the utilized loan amount together with a credit protection plan.
You can have the credit protection plan at a nominal price.
Citi Bank Business Loans
Citi Bank Business Loan
Citi Bank offers loans referred to as CitiBusiness that offer business loans through which startups can manage working capital efficiently. A startup can also opt for diversified MSME loan products which include working capital loans, short-term loans, long-term loans, overdrafts as well as export-import finance options too.
Citi India has transferred the ownership of its consumer business to Axis Bank starting from March 1st, 2023.
ICICI Bank Business Loans
ICICI Bank Business Loan
ICICI also offers startup loans. They have come up with “iStartup 2.0′, which provides a broad range of business solutions that help customers beyond their banking and business needs which can help you save time and energy, and allow you to concentrate on the essential business aspects. This program has been created to allow entrepreneurs to take advantage of loans.
If you choose to use the iStartup 2.0 which includes banking services, lots of other services are offered to you, which play an essential role in the development of your business, such as a debit card that has limits and more.
Loan Amount and Tenure
The minimum amount for a loan is INR 50,000 and the maximum amount is INR 40 Lakhs.
Loan Tenure is 12 months to 36 months.
Eligibility
Loans can be given to Self Employed individuals and the age criterion is 28 years. For doctors, the age criteria are 25 years.
The minimum turnover of the business for a no-professional has to be INR 40 Lakhs and for Professionals, it has to be INR 15 Lakhs
The minimum profit has to be INR 2 Lakhs for self-employed and INR 1 Lakhs for non-professionals.
One has to have a minimum 1-year relationship with ICICI Bank by having a current or saving account.
Documentation
Copy of PAN Card for Identity Proof.
2. A copy of any of the following documents as address proof:
Aadhaar Card
Passport
Voter’s ID Card
Driving License
3. Partnership deed or certificate for Partnership business and Sole Proprietorship establishment certificate is needed.
4. Last 3 Years’ Audited Financial reports that include balance, profit and loss account, tax Audit reports
5. Bank statement for the last 6 months
Interest Rate & Charges
For secured facilities: Up to Repo Rate +6.0 %(Non-PSL). For facilities backed by CGTMSE: Up to Repo Rate + 7.10%. The interest rate for each loan is determined based on the assessment of the business, financials, loan amount, and tenure.
The processing fees are up to 2% (plus applicable taxes) of the facility amount.
Benefits
Collateral or security is not needed.
An overdraft facility is offered by the bank.
There are numerous branches of the bank in India.
Loan processing is quick and simple.
If you opt for iStartup 2.0, you are given the perfect solution for healthcare, IT & services, real estate, and manufacturing. In short, it may prove to be a tiny step to the big leap.
Axis Bank Business Loans
Axis Bank Business Loan
Axis Bank is among the banks that could be the right option for you. It provides the required fund as a loan for the requirement of your business. Small and micro businesses can easily apply for loans in Axis Bank.
Loan Amount and Tenure
The loan amount is up to INR 50 Lakhs.
The tenure is 6 to 36 months.
Eligibility
The business must be at least 3 years old and running.
Have a minimum annual turnover of INR 30 Lakhs.
Individuals must be in the age group of 21 to 65 years.
The individual has to be Indian to apply for the loan.
Documentation
A copy of any of the documents for identity proof is mentioned down below:
Aadhar Card
Passport
Voter’s ID Card
Driving License
Pan Card
2. A copy of any of the documents for address proof mentioned down below:
Passport
Telephone Bill
Electricity Bill
Bank Statement with a cheque
3. Last 2 years’ Income Tax Return documents
4. Banks Statement for the last 6 months
5. Proof of the establishment of the business.
6. The last 2 years’ financial reports which include Profit and Loss Statement and Balance Sheet.
Interest Rate & Charges
The interest rate is 10.99% to 21%.
The processing fee is up to 2% of the loan amount that has been requested + Taxes applicable.
Benefits
No collateral or security is needed.
Least amount of documentation.
The application process for the loan is simple.
The tenure for the repayment is flexible.
Conclusion
The majority of entrepreneurs running businesses try to make funds on their own and invest them in their businesses and move forward. If you go back in time to those who have loans, only a few can use the money they have been granted. The issue of bank loans is a huge issue for some however the only requirement is how to utilize the facility in the right way. The startup culture is growing day by day, therefore the need for business loans is also increasing.
FAQs
Which bank is best for business loans?
The best bank for loans to startup businesses are:
HDFC Bank Business Loans
Citi Bank Business Loans
ICICI Bank Business Loans
Axis Bank Business Loans
What is a good credit score to get a business loan?
A credit score above 650 can be an excellent score to qualify for a business loan.
For a collateral-free business loan: A credit score above 700. For a secured business loan: A credit score is 650 to 700.
How do I qualify for a business loan?
To qualify for a business loan a few requirements are needed.
Business Credit Score.
The annual revenue of your business.
New Business Plan that includes forecast financial statements.
Additional financial collateral is needed to secure the loan.
Can I take a loan from a bank for business?
Absolutely. You can get a startup company loan through a bank to begin and grow your company. The rate of interest would be contingent upon the size of your loan as well as the time frame for repayment.
The entrepreneurial dreams of Indians have given the country over 94 Unicorns in recent years. This number is expected to cross a century by the end of 2022. Startups across the MSME sector have been at the heart of the Indian economy and generated millions of jobs for people across the country.
It is anticipated that MSMEs alone contribute 8% of the overall GDP, and startups play a huge role in it. But unfortunately, not every entrepreneurial dream gets the chance to take off due to a lack of funds. Keeping this in mind, the Indian government offers various government loans to help passionate entrepreneurs make through.
Budding entrepreneur with a revolutionary idea in mind should use the government loan schemes to transform their ideas into action. For further assistance of all entrepreneurs, we’ve curated this epic guide that has all the information on how to avail of a government loan for a startup.
Government business loans have always provided the necessary financial backing to startups. If a startup requires some financial help, the founders might want to apply for any one of the following government loans for a startup.
Pradhan Mantri MUDRA Yojana (PMMY)
Pradhan Mantri MUDRA Yojana (PMMY) – Government Business Loans for Startups
Launched in 2015, this government loan scheme offers business loans to non-corporate & non-farm small and micro-enterprises. Under this scheme, startups can avail of a loan amount of up to Rs. 10,00,000. The tenure for repayment for this collateral-free loan ranges from one year to five years. Startups can avail of this loan by visiting any nearest small finance bank, microfinance institution, commercial bank, and non-banking financial company.
The Pradhan Mantri MUDRA Yojana provides loans depending on the development stage of the startup. Hence, the applicants can find the following three segregation under this loan:
Loan Type
Coverage
Yearly Rate of Interest
Shishu
Up to Rs. 50,000
1% to 12%
Kishore
Above Rs. 50,000 to up to Rs. 5,00,000
8.60% to 11.15%
Tarun
Above Rs. 5,00,000 to up to Rs. 10,00,000
11.15% to 20%
Startup founders can apply for this loan if they’re a trader, shopkeeper, vendor, etc. Just visit any lending institution mentioned above or login to a PSB or 59 minutes portal and do the needful. They will guide further. Startups can utilize this loan as a working capital loan through the offered MUDRA card.
Pradhan Mantri MUDRA Yojana (PMMY) – Government Business Loans for Startups
MSME Loan in 59 Minutes
MSME Loan for Startups Approved in 59 minutes
As the name suggests, this loan offered by the government is approved in 59 minutes flat. Launched by SIDBI, this loan is ideal for small and medium-size startups that need capital assistance of under Rs. 10, 00,00,000 at a somewhat lesser interest rate. In some cases, the interest rate is as low as 8%.
To avail of this Public Sector Banks (PSB) loan scheme, startup founders can visit the Central Bank of India, Canara Bank, Bank of Baroda, Bank of India, SBI, etc., for a hassle-free loan application process. Once the loan application is processed and approved, the applicants can get the amount within 8-10 working days. Startup founders can also visit the PSB loan in 59 minutes portal to get more details about this loan scheme and apply.
Credit Guarantee Fund Trust Scheme for Micro & Small Enterprises
CGTMSE for starting new Business
Also known as CGTMSE, this government business loan provides collateral-free loans to startups. Launched by the SIDBI and MSME ministry, this loan scheme offers a loan amount of up to Rs. 2,00,00,000 to both new and existing startups. A special preference is given to women entrepreneurs under this loan scheme. Under the CGTMSE, startups can get a collateral-free loan of up to Rs. 10,00,000. But for any amount above this value, startups will have to provide collateral in the form of any building or land attached to the primary business.
Those who want to avail of the CGTMSE loan can approach a scheduled commercial bank or select a regional rural bank classified by NABARD for loan approval. Both new and existing startups can apply for this loan engaged in manufacturing activity, retail trade, and service activity.
Credit Facilitation Through Bank by NSIC
NSIC Launched by the MSME ministry for business loans
The NSIC has signed an MoU with various banks to provide super-fast and hassle-free loans to different startups. Launched by the MSME ministry, this one-of-a-kind loan facility is provided by NSIC under the central government. The best part of this government loan is that NSIC also helps complete the full documentation and legal formalities to quickly avail of the loan.
Small or medium startups needing a short-term loan for maintaining working capital or other operations should consider applying for this loan. It is a reasonably low-interest loan and can be availed by visiting any well-known banking institution like the HDFC bank, ICICI bank, Axis bank, YES bank, etc.
Credit Link Capital Subsidy Scheme
Also known as CCLCSS, it is a loan provided by the MSME ministry and the government of India to startups for technology upgradation. Startup founders that own a manufacturing enterprise, textile startup, fabrication unit, or any business that uses machines and equipment should avail of this loan of up to Rs. 15 lakh to upgrade to the latest technology. This loan helps startups stay up-to-date regarding technology to withstand the competition at local and global levels.
How to Choose the Best Loan Ideal for Your Business?
Now that the information related to top business loans offered by the government to startups is made available, some entrepreneurs might be confused about which one to proceed with. The answer is pretty simple. Every loan discussed above has a different purpose, interest rate, credit limit, etc. The startup founders should go ahead with the one that helps the business stay afloat and even scale in the best way possible.
To apply for any of the above-discussed government business loans, startup founders can head to the respective website of the financial institution providing the loan, fill out the application, and wait for someone from the organization to contact them. Business loans offered by Government are sure to help you accelerate your business growth, so they should be applied for.
FAQs
What are the Government loans for startups?
List of Government Loans for Startups are:
Pradhan Mantri MUDRA Yojana (PMMY)
MSME Loan in 59 Minutes
Credit Guarantee Fund Scheme for Micro & Small Enterprises
Credit Facilitation through Bank by NSIC
Credit Link Capital Subsidy Scheme
How much loan can you get under the MSME government business loan scheme?
Under the MSME government business loan scheme, as an MSME, a startup/business can get a loan sanction of up to Rs. 1 crore within just 59 minutes.
What is the eligibility for a startup business loan?
Eligibility Criteria for Startup Business Loan are:
Resident citizen of India
Minimum CIBIL score of 700
Business should at least 2 years old
Annual income of business should be at least INR 2 lakhs
Applicant Should be between 21 years to 65 years of age
Has Facebook stepped into the banking sector? Will they be renamed for their new venture? Is there any other type of loans and services they provide? A lot of such questions popped up as soon as their announcement of the ‘Small Business Loans Initiative’ came out. However, it is important to note here that even in the past couple of years, Facebook has offered such loans or credit grants to small businesses around the world. They wanted to make it easy for SMBs to secure a loan quickly in times of need. India became the first country for Facebook to launch this ‘Small Business Loans Initiative’ programme, which was launched on August 20, 2021. Read further to know about Facebook’s new loan initiative and the reason for its commitment to it.
Small Business Loan Initiative is a new initiative taken by Facebook partnered with Indifi, an online lending platform. Their primary vision is to provide loans to small businesses. They wanted to create an accessible and easy way for SMBs to take a loan without much delay in the process. Businesses that are attached/listed on Facebook, will have the eligibility to apply for this loan.
Though Facebook is leading this initiative, it does not directly involve in the entire process. Fixing the eligibility criteria, processing loans, risks in repayment are all borne by the lending partner. Facebook, on the other side, creates awareness of this programme and formulates regulatory frameworks for this business. It serves as a bridge to connect SMBs with lending partners. India is the first country where Facebook launched this initiative in August 2021. This facility is available to businesses across 200+ cities and towns in India so far.
Components and Benefits of Loan Initiative Programme
Here’s a look at some of the key features of the loan programme:
Loan Amount: Facebook business loan for small business initiative offers the businesses a loan amount ranging from Rs 5 lac-50 lac, which is based on the business requirements. As the majority of the traditional business lenders often shy away from lending money to businesses nowadays, the Facebook loan initiative would certainly be a boon thereby solving the problem of the business capital.
A Quick Process and Collateral-Free: The applicants can apply for this loan online and it won’t even be needing collateral. Furthermore, the application process is really fast and simple. Once it is approved, the loan would be disbursed within three working days.
Fixed-rate of interest: The Facebook-backed business loan boasts of a fixed interest rate between 17%-20% annually. Notwithstanding, the loan amount, which might be anything between 5 lacs and 50 lacs, the rate of interest is capped the same.
Provision for the women: The businesses that are owned entirely or in part by women are allowed special concessions. This would mean a 0.2% reduction in the rate of interest. This initiative is designed to motivate more entrepreneurs in the time upcoming.
Quick Support: After the application, the users would be confirmed for the approval of the loan within one working day. After that, they would easily be able to find out the status of the loan by calling the customer service department of Indifi.
No processing fee: The Facebook loan initiative for small businesses does not require any processing fees.
Collateral-free: The loan initiative programme that has Facebook partnering with Indifi will not need any collateral security against the amount lent.
Why Facebook started giving Business Loans in India?
Facebook’s Business Loan Initiative in India
Facebook has conducted a survey in 2020 with OECD and World Bank, to analyze the challenges faced by Small and Midsize Business (SMB) sectors. The outcome of the survey was the reason for the birth of the ‘Small Business Loans Initiative’. Here are the reasons why:
The survey showed that the major factors affecting Small and Midsized Businesses are Capital and Cashflow. Timely requirement of Capital is necessary for the efficient and smooth functioning of the businesses.
Most SMBs expressed their concern about the time taken to obtain credits from financial institutions.
So, Facebook along with Indifi has taken these issues into its own hands. They provide loans to businesses that advertise through Facebook.
Under this programme, SMBs can receive credits in less than five days.
It is evident that Small Businesses are going to push India’s financial and economic sectors. Facebook acknowledged it by saying that they are doing this for the economic growth of our country.
In the words of Ajit Mohan, Facebook India’s CEO, “We’re not looking to make money from this programme and we don’t have any revenue share. But we are hoping, this creates growth in the economy that will eventually benefit us”.
Facebook just serves as a platform to provide loans through Indifi. This retrieves the businesses from their constraints caused due to lockdown.
Other initiatives by Facebook
Small Grants Programme was launched by Facebook in 2020. Through this, they contributed a $100 million dollar grant to SMBs across the world. This programme was launched in more than 30 countries. This was to support the SMBs that were suffering from the effects of the Covid-19 pandemic.
Small and Midsized business is the major occupant of the Indian business sector. They constitute roughly 63.4 million units spread across the country. They contribute to 6.11% of manufacturing GDP, 24,62% of the service sector’s GDP. They also contribute an enormous 33.4% towards India’s manufacturing output.
Such a huge sector, when affected largely, has an adverse effect on an economy. As a result, India’s GDP for the year 2020-21, has fallen by 7.3%. India hasn’t faced such a huge drop in GDP in 68 years.
Most of the SMBs operate regionally. They require capital for their day-to-day operations. The lockdown implemented across the country was the reason for their steep downfall. When they returned to business, there was no capital to invest. Facebook identified their issue and addressed it at the right time through the ‘Small Business Loans Initiative’.
Indifi is an online financial lender that was started to provide business loans to small businesses operating in India. They serve with a motto ‘We Help Small Businesses Thrive’. They stand true to their words by taking all necessary measures towards SMBs development.
It is an Indian company started by Alok Mittal in the year 2015. They provide financial services to diverse business entities like travel, e-commerce, hospitality, retail, etc., Indifi serves to be the first lending partner to be associated with Facebook.
Conclusion
Facebook has taken measures to promote the country’s economy through various initiatives. It has promised to do more in the future. With these tech giants investing in the business sectors, it is going to be a boon for SMBs and as a result to India’s economy. It’s the right time for Small Businesses to capitalize on the opportunities showered on them.
FAQs
Has Facebook launched the Small Business Loans initiative in India?
Facebook India partnered with Indifi, an online lending platform to provide business loans to small businesses.
What is the loan amount offered by Facebook Small Business Loan Initiative?
Facebook Small Business Loan Initiative offers loans from 5 lakhs to 50 lakhs for small businesses.
What is the interest charged on loans through Facebook Small Business Loan Initiative?
Loans by Facebook for small businesses are offered at interest rates of 17% to 19%.
Sitting on a brilliant business idea with no money to back it up? Funding is a tricky issue for most startups. Finding an investor is always difficult, and the lack of money gives most entrepreneurs jitters in the initial days. That is when they look at startup loans or guaranteed payday loans – two interesting funding sources you too must have heard of. While business loans are helpful in most situations, they have some disadvantages too. Let’s have a look at both the pros and cons of startup business loans so that you can decide if they’re the way for your startup.
Everybody wants to upscale and keep all their business’ shares with themselves. This pleasant situation is made possible by business loans. The owners keep their company’s hold and also enjoy the luxury of upscaling their startup.
With investors comes the hassle of managing the board with their preferences. Having distributed stocks reduces your profits with time. Lenders usually have no interest in your management. They care only about money and give out loans without asking for extra perks.
Temporary in nature
Business loans are for a limited time. After the whole loan is repaid, the lending institution won’t bother you. On the other hand, attracting investors comes with an obligation to pay dividends to the shareholders regularly, which may last as long as the company.
With time, the dividend sum increase with the increase in the company’s worth. Startup business loans, on the contrary, reduce steeply as you keep repaying. This temporary nature of loans makes them worth a try for those looking to stay financially freer.
Build business credit
As the company grows, production increases rapidly, and so does the need for money. Even if you did not start your company with a loan, you might need to expand or design a new product or service.
A credit score is important for lenders to consider your loan application. Taking a startup loan and repaying it on time can get your company a good credit score, opening the gates for future loans. Without a credit record to build on, some lenders might not give you a loan later if you need one to expand.
Personal Wealth Can Be Safeguarded
A starting business loan might assist you to separate your personal money from the finances of your company. Every new business initiative carries a risk; even the most well-planned venture may confront challenges beyond your control as the owner.
Disadvantages
Not easy to get
Getting startup business loans approved is a tough cookie. Unless you already have an established business or some collateral to pledge, there’s very little chance that a lender will trust you.
With the recent financial crunch they have found themselves in, banks and NBFCs have a strict policy concerning lending. Only businesses which they believe can repay the loan can get the loans. With such high scrutiny, it becomes infinitely difficult for a new and fresh startup to get loans. The difficulties in availing of loans are decreasing with time, but the hassle is significant even today.
A high rate of interest
Lenders’ most significant way to earn money is through interests. These interests can break the backbone of any small business. As a small business owner, it gets challenging to manage the competition and interest rates all at once.
As time passes by, every business faces a low-revenue phase. High-interest rates during those low phases can hurt you even more and potentially result in bankruptcy. Interest accrues as you delay payments, and you might soon find yourself into a black hole of financial trouble. To avoid this, however, you can plan repayments efficiently and opt for lower-interest loans.
Less Money to Invest in Business
Startup loans naturally come with a repayment obligation. As you repay heftily to the bank every month, you will be left with little cash to reinvest in your business’ growth. You might even have to compromise on buying equipment or hiring new employees. These restrictions can hamper the speed at which you had envisioned your business growing. However, better cash flow management can save you from this trouble as well.
Your personal money will not be safeguarded by a small business loan. Because lending to small businesses has a higher risk, many financial institutions want a personal guarantee, which means the bank can pursue you for repayment if the business fails. As a result, your credit score and assets may be affected.
If you’re concerned about the impact on your personal credit, we recommend waiting a few months until your company is more established. That way, you’ll be able to pay back your loan on schedule while maintaining your good credit.
Katerra, a modular construction company, filed for Chapter 11 bankruptcy protection in early June 2021. In 2018, the SoftBank-backed unicorn was valued at $3 billion and had raised over $1.5 billion in total capital from Khosla Ventures and Greenoaks Capital Management, among others.
Although mismanagement was regarded as the cause of the company’s demise, the failure of lender Greensill Capital just three months prior also played a factor.
While SoftBank was funding Katerra directly, Greensill, a SoftBank Vision Fund recipient ($1.5B), was also funding Katerra, demonstrating SoftBank’s portfolio’s interconnectedness. This downward spiral has caused some to question SoftBank’s Vision Fund’s viability, especially in light of the 2019 collapse of co-working unicorn WeWork, in which SoftBank was the principal investor.
At the beginning of April 2021, Madefire, a digital comics firm, went for an assignment of benefit for creditors (ABC), an alternative to official bankruptcy. For many Madefire users, this was a surprise announcement, as they had been given until the end of the month to download their purchases.
Several digital comics applications, including Archie Unlimited and IDW, were also taken down as a result of the Madefire app. Despite having a diverse roster of musicians and investors, including Dave Gibbons and Drake, the organisation died in the face of competition.
As you think and analyze the advantages and disadvantages of bank loans, understand that opting for a small amount to start your startup is not a bad option if you are a good planner. You may look at guaranteed payday loans in the beginning and think about other options later.
Qualifying for a small business starting loan, on the other hand, could mean having money to start a firm without having to repay loved ones or investors who demand ownership in exchange for their money. Before deciding to pursue this lending option, small business owners should analyse all factors. Let us know what you think about taking a business loan for your budding startup in the comments below.
As the company grows, production increases rapidly, and so does the need for money. Even if you did not start your company with a loan, you might need to expand or design a new product or service. A credit score is important for lenders to consider your loan application. Taking a startup loan and repaying it on time can get your company a good credit score, opening the gates for future loans. Without a credit record to build on, some lenders might not give you a loan later if you need one to expand.
Is Business loans are easy to get?
Getting startup business loans approved is a tough cookie. Unless you already have an established business or some collateral to pledge, there’s very little chance that a lender will trust you. With the recent financial crunch they have found themselves in, banks and NBFCs have a strict policy concerning lending. Only businesses which they believe can repay the loan can get the loans. With such high scrutiny, it becomes infinitely difficult for a new and fresh startup to get loans. The difficulties in availing of loans are decreasing with time, but the hassle is significant even today.
It’s Possible That Your Credit Will Be Ruined?
Your personal money will not be safeguarded by a small business loan. Because lending to small businesses has a higher risk, many financial institutions want a personal guarantee, which means the bank can pursue you for repayment if the business fails. As a result, your credit score and assets may be affected. If you’re concerned about the impact on your personal credit, we recommend waiting a few months until your company is more established. That way, you’ll be able to pay back your loan on schedule while maintaining your good credit.
