Startup Business Loans Expert Advice

India has become the third-largest startup ecosystem worldwide, with more than 72,000 registered startups. With such a high volume of new companies rising, the need for capital to turn ideas into processes also runs high. However, some startups default on repayments due to inadequate revenues or profitability.

If you are an entrepreneur looking to build your company based on an idea, business loans for startups can prove to be an ideal fundraising avenue. But what is the right time to apply for such loans?

This blog will help you understand the right time to raise business funding for startups through expert tips and advice.

What Are Startup Business Loans?

Lenders such as banks and NBFCs have designed business loans targeted towards fulfilling the capital needs of almost all types of startups. Startup business loans are a loan type that offers immediate capital to an entrepreneur without the need for collateral. When entrepreneurs apply for such loans, the lenders approve the loan application within 30 minutes of submission.

Furthermore, the lenders disburse the loan amount within 48 hours of approval into the borrower's bank account. However, like other types of loans, entrepreneurs or borrowers are legally liable to repay the loan amount.

Expert Advice On Startup Business Loans

Business loans for startups are ideal for entrepreneurs to ensure they implement their startup idea effectively. However, applying for an online business loan creates a legal contract where you are legally liable to repay the principal amount and interest to the lender within the loan term.

Such repayment creates a financial obligation, affecting your credit score in the long run and the business’ profits. Hence, entrepreneurs must thoroughly analyse the need to avail of business funding for startups through small business loans startups.

In the quest to understand whether you should apply for a startup business loan, it is wise to take expert advice. Such experts have extensive knowledge about the startup and funding ecosystem and allow entrepreneurs to mitigate financial burdens that can impact the company finances.

Here are some tips by startup experts that can help you make an informed decision on the right time to apply for business loans for startups:

1. Business Idea

The foremost factor that affects the approval of a loan for a business is the business idea. As you will use all the funds raised to implement the business idea into operations, your business idea must be unique and valuable.

The startup’s business idea must address a genuine customer need which is prevailing in the market and has no other resource as a solution. Furthermore, the business decision must be effective enough to solve a common problem of customers for which they will be willing to pay money. You can apply for a startup business loan if you have a revolutionary business idea.

2. Management Team

It is a common saying in the startup ecosystem that the business idea is as good as the team responsible for its implementation. You may raise capital for your startup through a loan for business, but it is vital to have a good management team to manage the finances and ensure the appropriate use of funds.

If the management team is not skilled enough, the business may not flourish even if you have raised adequate capital for your startup through a loan for business. Hence, if you have a good management team that can use the loan amount adequately to implement the business idea, you can apply for a loan for your startup.

3. Runway

Every startup founder needs to think ahead in terms of operations and finances to ensure the startup's sustainability. When running the startup, you must think future forward and whether you will have adequate capital to fund the operations.

A comprehensive analysis of the operational capacity and company finances can help understand whether you would have enough runway for the next 2-3 years. If you are short on funds, you can take a small business loan startup to add to the runway and use the capital to achieve business goals in the future.

4. Demand and Supply

The economy runs on the demand and supply equilibrium, which allows startups to price their products or services. Your startup may only succeed if your product or service attracts enough customers to drive demand and justify your pricing.

You should ensure the market demand for your product and service before applying for business funding for startups through an online business loan. If your startup is in the trial phase of analysing market demand, it is wise to wait for this period to be over and then apply for a loan for your business.

Apply For An Idea Business Loan For Startups From IIFL Finance

IIFL Finance is India’s leading financial services company that provides comprehensive and customised loans for startups in India. The proprietary startup loan offers instant funds up to Rs 30 lakh with a quick disbursal process. You can avail of the loan without collateral and repay through flexible EMIs. You can apply for the loan online by verifying your KYC details or visiting IIFL Finance nearest branch offline.

FAQs:

Q.1: How to get a startup loan from IIFL Finance?
Ans: You can get a startup loan from IIFL Finance by visiting IIFL Finance website and submitting the online application form.

Q.2: Is it mandatory to have a business plan before availing of a start-up business loan from IIFL Finance?
Ans: Yes. It is mandatory to have a business plan before applying for a startup business loan.

Q.3: Can I buy startup equipment from IIFL Finance loan?
Ans: Yes. You can buy any startup equipment from the secured loan amount and repay the loan through flexible repayment options.