Startups are the current powerhouses that drive our country’s economic landscape. However, every entrepreneur must answer the question of funding that would drive their dream. Ever since the advent of Startup India Campaign, there has been a splurge in the number of financial platforms rising to assist firms. Even the latest Budget of 2020-2021 that unfolded on February 2nd has at least 15 mentions on helping the growth of startups. Hence the Indian soil is currently the most fertile for budding startups to thrive.Despite the number of options available, compiled below are the reasons why availing a business loan would prove to be a better choice to fund your startup.
What are Business Loans?
A business loan is a loan option provided by prominent banks and NBFCs to assist business platforms and entrepreneurs.
- The current interest rate for a business loan in India is estimated to be around 13.5%. This interest rate is dependent on the lender and factors such as the credit history of the applicant, documentation etc. Specific NBFC platforms, for example, Fullerton India, provide business loan interest rate from 17% to 21%.
- Applicants can also choose from flat and diminishing interest rates. The former creates fixed EMIs to be paid throughout the loan tenure. While the latter, diminishing flat rates reduce EMI loans as the course of the loan proceeds.
Benefits Of Obtaining Business Loans:
- New entrepreneurs are eligible for tax reliefs under the old budget as well as the new budget that was proposed. The new budget also increased the turnover limit from Rs. 25 crores to Rs. 100 crores that allowed 100% deduction on profits for three consecutive years out of seven years.
- Obtaining funds from venture capitalists can be expensive because they often charge exorbitant rates as returns on investment. There is no such equity dilution for business loans secured from NBFCs or banks, and the interest rates are fixed.
- NBFCs and banks are more comfortable to approach. NBFC platforms such as Fullerton India provide easy online application processes which are entirely hassle-free.
- There is a faster disbursal of funds when business loans are taken. Fullerton India, a prominent NBFC, for example, provides upto Rs. 50 lakhs* without collaterals. They also have flexible schemes that can synchronize with both short term and long term goals of the entrepreneurs and firms.
- The profits that borrowers gain from their businesses belong only to them. They aren’t held answerable by banks or NBFCs for any profit or loss.
The Process Involved In Availing A Business Loan
Now that you have decided to apply for business loans, the following checkpoints assist you in its process.
- Verify the lender credibility
Although business loans are a debt taken from the financial platforms, it is essential to understand the company’s reliability through practical due diligence analysis.
- Compile business and personal information
Every lender has specific requirements that should be satisfied by the applicants. Compile business information, figure, financial statements and estimates along with your personal information before the application.
- Complete the online application
All mandatory fields of information should be filled with factual data. Failing to do so could lead to loan rejection.
- Wait for confirmation
Usually, lenders might require 24 hours to verify through the details submitted, and if found accurate, the loan is approved for the company. In case of non-approval, the company owner can ask for feedback from the lender. It can help applicants improve during reapplying.
Business loans aid entrepreneurs and businesses to grow, maintain and expand their business. However, entrepreneurs should provide accurate information fulfilling the business loan eligibility criteria for the instant approval of the loan without any hassle.