5 Steps to secure a business loan for your startup
With the ever-increasing number of consumer worldwide, the demand for varied goods and services with the lesser hassle is increasing rapidly. This continuous increase in the demand is largely favouring the startup culture in India and other countries, because of which a significant number of youngsters are opting for the risky entrepreneurship path. As of now, the Economic Survey of 2016 has recorded the registration of around 19000 startups in India. If we talk about the global data, the number of startups is somewhere around 472 million, with 100 million new startups adding up to the list annually.
To be honest, all this is being possible thanks to the start-up friendly initiatives and funding schemes (business loan) launched by the local government. Each year, a significant number of youngster voluntarily chose to become a part of this thrilling start-up culture rather than opting for the safer and much comfortable, traditional careers. But, as they say, it takes a lot more than just a good idea to launch a startup and make it stable enough to survive the heat of throat cutting competition in the market. Sadly, out of all the startups launched, a major number of them don’t even survive for a year and collapse. The reasons for failure is simple: lack of proper planning, insufficient funds, lack of good investors, an effective management plan. Though a lot can’t be done about it to help, but there one problem which has a solution: Insufficient finances. If you don’t have investors or other sources to secure money for your startup, no worries. With a decent business loan, anyone can get rid of their financial crisis and continue their entrepreneurial journey.
Yet, as people generally say, “it’s easier said than done” securing a business loan might sound easy but it’s not that way. However, with the right knowledge and help the process can be liking baking a cake. So, if you are planning to secure a loan, here is how you can do it smoothly.
Step 1: Determine The Amount
The first thing to do before applying for a business loan, whether yours is a startup or established business, is to articulate why and how much funds would the business need. The calculation would be easier if a legit financial statement is already in place, ready to address the question “how much?” accurately. So, find out how much you need before you move on further.
Step 2: Take Some Professional Help
Your financial knowledge may be good, but while applying for a business loan you definitely need to consult an expert. These experts know everything about the finance industry and will guide you throughout the process, making it easier and less stressful.
Step 3: Review Your Credit Score and History
The credit score is the factor that determines whether you are eligible for a loan or not, and how much loan you can actually get. Credit score management starts even before you think of taking a loan, and it’s very important to maintain a good score in order to secure a desirable loan. Before applying for a loan, check your credit score for any chances of possible errors and get it fixed. Take help from professionals who work in the respective domain if need be.
Step 4: Evaluate your Options
Depending on the business loan that you’re seeking, there can be an infinite number of options that can approve your loan. People generally go for big commercial banks, whereas, the local commercial banks can be a suitable alternative too. Other perfect alternatives can be a local credit union, micro-finance loan vendor, and regional banks. So, don’t just stick to big guns, go for the ones that aren’t popular yet.
Step 5: Prepare Your Business Plan and Presentation
The Business loan vendors will ask for the business plan along with loan application, which is also necessary to determine how much money you need. And, your business plan might be the key to your success depends on how well you have planned it. Also, prepare a business presentation along with your business plan to woo the loan office, and make sure your presentation is compelling enough to ensure loan approval.
That’s all that you will need to get through the process of securing a business loan. Just make sure you follow all the above-mentioned steps properly.