Small Business Startup Loans

Methods of Getting Funds for Startups

The first step for funding a startup is called seed funding, which is later followed by A, B and C rounds. All these rounds vary in terms of maturity and investors involved. This series is significant since it evolves a startup into a full-fledged organisation by providing it with all required funds. Here is a list of a few successful startup funding options to meet the requirements of loans for startups:

  • Business Loans

Applying for business loans from an NBFC is an excellent option for funding business goals. The loans do not require any collateral and are hence sanctioned swiftly. The loan can be applied from the comfort of your home by filling out the online application form and uploading scanned documents. One can obtain business funding of up to 50 lakhs* within 24* hours without any hassle. The best part about business loans is that one does not have to share the ownership of their business for capital funding or expansion. 

  • Angel Financing

These loans are provided by angel investors who fund a startup in its early stages by acquiring ownership interests. This method of funding a startup has grown popular and has numerous benefits, including having strategic partners, gaining credibility by association, and knowledge of the marketplace of competitors. 

  • Crowdfunding

Crowdfunding is the process of raising funds by making use of websites and gaining funders. This method helps startups by allowing them to promote their products and services. A startup owner can easily set up a profile on a crowdfunding website and provide all the necessary details along with the amount of money raised. Interested people can then donate to these funding campaigns by visiting the website. 

With business loans, entrepreneurs can avail of finances easily at flexible business loan interest rates and with minimum documentation.

Additional Read: PROS AND CONS OF AVAILING A BUSINESS LOAN FOR YOUR STARTUP

Here is All You Require to Know About the Small Business Startup Loans

Since the Startup India campaign launched in 2015, the number of new Micro, Small, and Medium Enterprises (MSMEs) has increased. The program is based on an action plan aimed at encouraging startup loans. It has also boosted the number of startups, which will lead to greater job creation and contribute to the country’s economic progress.

What are startup business loans used for?

Purchasing inventory or equipment, working capital to fund payroll and everyday expenses, renovation and remodeling, and real estate acquisition are popular applications for availing business loans. The purpose of the startup loans will help you identify which sort of financing is ideal for your company.

What is necessary to get a small business loan?

Small business loans are determined by factors such as:

  • Personal and business credit
  • The firm’s age
  • The company’s cash flow
  • Existing debt obligations
  • The industry in which the business operates 

The business loan eligibility for a small business lender will often require 3 things:

  • That a company has been in service for one year
  • It has a minimum credit score of 600
  • It has financial documents that demonstrate its ability to service its loan obligations

Are financing institutions willing to lend to startups?

A financial institution’s decision to lend to a startup is based on many criteria, some of which include: 

  • Capital: Lenders prefer to see business assets utilized to generate revenue, making loan payments.
  • Collateral: You may be able to secure your loan with collateral such as equipment, personal assets, or a co-signer in some cases.
  • Cash Flow: This is what some people refer to as capacity. But what this means is that the company has a track record of money flowing in.

Credit: Some people refer to this characteristic as “character,” which is linked to having a positive relationship with your lender.

Must Read: Top 9 Profitable Business Ideas For Women in 2022