How To Get A Small Business Loan For A Startup

 There are a plethora of innovative startup ideas available in this digital age, and young entrepreneurs are seizing possibilities to build potentially world-beating firms. Even if the concept is unique, what each entrepreneur really needs is the funding to get their firm off the ground and develop.

Now, a new entrepreneur may have a few financial options to consider:

  • Identifying venture capitalists
  • Using something like crowdfunding to think outside the box.
  • Making loan applications to banks
  • Taking out loans from non-banking financial institutions (NBFC)

Even if there are a few funding possibilities, the majority of them, such as venture capitalists or crowdfunding, can be quite tough to obtain. As a result, the majority of business owners prefer to take out loans from banks or other lending institutions. Continue reading to learn everything you need to know about getting a loan for a new business.



ELIGIBILITY FOR STARTUP BUSINESS LOAN

For business loans, each lender has their own set of eligibility conditions. The following (or similar) eligibility criteria are used by most banks and NBFCs:

  •  A company that has been in operation for at least six months.
  • A turnover of at least Rs. 90,000 in the last three months.
  • In SBA finance listings, the type of business should not be blacklisted or omitted.
  • The business's physical location should not be on the list of unfavourable locations.
  • The company should not be a charitable trust or non-profit organisation.
STARTUP BUSINESS LOANS - BANKS OR NBFCS?

It is common knowledge that getting a traditional bank to grant a loan for a company in its early stages can be tough. Banks like businesses that are well-established and have been in operation for a long time. As a result, it is prudent to seek financing from alternative lenders or non-bank financial companies (NBFCs).

INTEREST RATE OF STARTUP BUSINESS LOAN

When it comes to choosing a lender, one of the most important aspects to consider is the interest rate. This is because, in their early stages, most startups and small enterprises make absolutely no money, and a higher interest rate will not only increase the overall repayable amount, but also dramatically increase EMIs. Physical banks will have a higher interest rate due to their higher operational costs.

Fintech NBFCs, on the other hand, can afford lower interest rates because they operate mostly online and digitally, resulting in cheaper operational costs. As a result, for a new business, Fintech NBFC loans may be the best option in terms of interest rates.

DOCUMENTS REQUIRED FOR STARTUP BUSINESS LOANS

The paperwork needed for company loans can vary from one lender to the next. Banks frequently rely on a lot of paperwork, mostly in the form of physical documents. 'Online only' NBFCs, on the other hand, are known to simply require relevant company and personal paperwork in digital form, making it easier. The following is a list of basic documents that are required:

  • A bank statement from the previous six to twelve months.
  • Proof of business registration, such as a certificate of incorporation or a GST filing.
  • A trade licence, a drug licence, a tax identification number (TIN), or a VAT registration.
  • Aadhar Card copy of the possessor
  • A copy of both the proprietor's and the company's PAN cards.
  • A copy of the Partnership Deed is required (if applicable).
Conclusion

As a result, NBFCs are one of the finest places to go for a small business loan for your startup. There is less paperwork, and the turnaround time is quite quick. Most fintech NBFCs can approve your loan in as little as 15 days. So, what do you have to lose? Apply as soon as possible for your new company loan!You can call our helpline number +91-9477079053 to learn about the greatest prices and offers. They will assist you in every way they can. If you have any further questions, please contact me at Best Business Loan in India. 

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