Need Funds For Your Business? Business Loan India Replies To Your Query
How To Fund My Business? Getting funds for your new business is one of the greatest challenge that entrepreneurs are facing. With plethora of funding options available, business loan India offered by the banks as well as private financial lenders seems to be the most preferred option after personal loans.
With angel investors and venture capital firms enjoying plenty of coverage as a great source of funding for startups and small businesses, many entrepreneurs are not aware that financial institutions as well as Banks of India are also an avenue for funding their startups.
In fact, Indian Banks are one of the largest funders of startups in India, providing business loans to thousand of startups every year.
For those seeking business loan India; we have try to manage to answer host of questions surrounding business loan for startup business in India.
Do Banks Offer Business Loans To Startups?
It’s a very commonly asked questions when people search for business loan India over Google. For the businesses starting up for the first time or wish to do business in innovative areas than yes, banks will typically are keen to know the reason behind. Furthermore; you will be asked to put a higher collateral security coverage typically with other source or back-up sources of income. If the same can be provided, banks do provide business loans to the startups without any hassles.
How Much Business Loans Do Banks Offer?
It seems obvious for any bank or a private lender to know the reason for and how much the loan amount is required. Entrepreneurs of the start-ups may asked the process of determining the number of funds they need and why. Business owners, whether the firms are start-ups or existing firms, need to take some time and be able to clearly articulate why they need a business loan and how much they need.
Often, businesses may not be able to address the question of how much they need until they prepare their financial statements as part of their business plans.
What Kind Of Business Loans India Will Be Good For My Startup?
There are basically 3 types of loan categories that you could borrow from. Furthermore; these loans are specific to what your business currently needs are. You can also choose on the basis of the stage of business that you’re in.
-
Working Capital Loans
Working capital loan is the funds you will need to meet your day-to-day business expenses like your monthly electricity bills. Your business operational costs comes under working capital hence; these loans are crafted to suit your capital needs alone.
Working capital loans are offered typically for a 12-month tenure and have an interest rate of 12% to 16%. These can be either secured or unsecured.
-
Corporate Term Loan
Corporate term loans are widely used to start a venture new business or expand the same. Therefore; if you are starting up, you may want to look at term loans/funding. These are large sums of money borrowed from banks or financial institutions that are expected to be repaid over a longer period of time.
These loans are secured and possess longer tenure and the interest rate is negotiable.
-
Term Loans
Term loans are used to buy fixed assets. If you want to put up an office, you could consider borrowing a term loan. Typically, these loans are secured with a tenure of up to 10 years with a floating interest rate between 12 and 18%.
How To Find Out If I Qualify For Business Loan India?
If your business is new (start-up) or it is less than 3 years old, your personal credit history will be evaluated as well as your business credit history. Hence; before you go ahead and apply for business loan India, take some time to get your personal credit history in order.
It is important to know where you stand in your credit history report. If you are finding any errors in your credit reports, you can open a “Dispute Resolution” with CIBIL and ask to fix it by submitting relevant documents. t to be fixed. If there is an error that the agency will not fix, file a credit dispute report. Hence; to qualify for business loans, you will require your credit score to be more than 700.
In addition to your credit score, banks as well as private lender will be asking few questions like:
- For how long have you been in the business
- If it’s a new business, you need to submit your business plan and explain the process
- Are you making enough money to repay the loan
- Can you make the payments?
- What kind of collateral you are putting against business loans
What All Documents Are Required For Getting Business Loan India?
Banks and other traditional lenders typically ask for a wide range of financial and legal documents during the application process. They can include:
- Business plan for startups
- Personal and business income tax returns
- Balance sheet and income statement
- Personal and business bank statements
- Commercial leases
- Business licenses
- Articles of incorporation
- A resume that shows relevant management or business experience
- Financial projections if you have a limited operating history
However; these requirements can make getting a business loan bit time consuming. That may not be an issue if you’re in the market for a long-term business loans to finance a major investment.
Can I Get Business Loans Without Collateral?
A major requirement for starting a new business is capital. In the case of first generation (first time) entrepreneurs, both equity and debt are hard to come-by hence; it is a major hurdle for many first time ( first generation) entrepreneurs.
Therefore;in an effort to promote first generation entrepreneurs and their dreams of setting up a business, the Government of India through the Credit Guarantee Fund Trust for Micro and Small Enterprises -CGTMSE have come forward in providing access of capital in terms of business loans for the first generation entrepreneurs to bank credit without the hassles of collaterals as well as third party guarantees.
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