Getting a business loan is usually harder for startups than for established businesses. That’s because new ventures are usually seen as more risky due to a less established client base and irregular revenues. However, still, new business owners can still boost their chances of getting approved by selecting the right financing option. A business loan, particularly obtained from a leading NBFC can help startups secure the necessary funding.
Usually, NBFCs don’t carry strict loan requirements as imposed by traditional banks. For example, startup venture owners can get a business loan up to Rs. 80 lakhs at a CIBIL score of as low as 685. Also, the interest rates offered are competitive and start from only 9.75% p.a.
With this right approach, a startup can secure financing to cover expenses and expand its operations. In this article, let’s gain more clarity and see how a loan can finance your new startup venture and help you grow.
Use business loan to cover your initial setup costs
As an entrepreneur, you must be aware of the substantial expenses that are incurred while starting a new business. Commonly, these include:
- Renting office space
- Hiring the initial staff
- Buying necessary gadgets from any offline/ online store
- Purchase equipment and inventory
Now, a business loan can provide the necessary funds to cover these initial setup and operational costs. Notably, these business loans also come in different variants and you can choose the option that best suits your needs:
- Flexi hybrid loan
- Flexi term loan
- Term loan
With the flexi options, you get a pre-approved loan limit and have to pay interest only on the amount utilised. This loan option helps you in the initial phase of your business when cash inflows are irregular and unpredictable. Gradually, as you scale, you can opt for the term loan variant which requires you to pay a fixed EMI.
Additionally, a business loan prevents early cash shortages. It maintains financial stability and gives your startup the flexibility to expand and adapt as per the market needs.
Taking on early business loans build your credit history
A business loan establishes “credit history” for your startup. By taking a small loan initially and repaying it on time, you demonstrate creditworthiness. This builds trust with lenders and allows you to secure future loans at better interest rates and favourable terms. However, while securing this first business loan, it is important to choose a reputable lender. This ensures:
- Fair terms
- Transparent fees
- Reliable support
Additionally, trustworthy lenders offer flexible repayment options and protect you from predatory practices.
Use proceeds to invest in marketing and customer acquisition
Marketing and customer acquisition are two important business processes that significantly help a startup to grow. Ideally, startup owners should use a business loan to fund these activities. With adequate financing, you can easily invest in marketing channels like:
- Social media
- Search engine ads
- Content marketing
For new startups, this visibility is highly important. It builds brand awareness and a loyal customer base. Additionally, you can allocate a part of the loan to targeted campaigns. This technique increases revenue in the short term.
However, be aware that marketing costs can be high, especially if you are competing in a crowded market. Therefore, the key here is to obtain a business loan at competitive interest rates with relaxed terms. You can secure funding up to Rs. 80 lakhs at an interest rate starting from only 9.75% p.a. Also, there is no need for any collateral or guarantor. You can get quick approvals and expect money in your bank account within 48 hours of approval.
Easily scale up and expand with a business loan
Once your startup gains traction, you need to scale up quickly. This helps you to stay competitive. And, to scale you will again need funds for:
- Hiring new staff
- Opening additional locations
- Making necessary business purchases
- Developing new products, and more.
Be aware that these early growth stages are important as they establish market presence and customer loyalty. When you have the necessary funds, you can quickly respond to market demands. A loan can also help you to meet increased demands for inventory or staffing without straining your cash reserves.
Business loans act as a vital support for startup ventures. It helps to cover initial costs like office rent, hiring staff, and purchasing equipment. Also, it allows startup owners to build their credit history which makes them eligible for future loans at low interest rates and relaxed loan terms.
Startups can access collateral-free financing up to Rs. 80 lakhs at competitive interest rates starting from only 9.75% p.a. The repayment terms are also flexible and can be stretched up to 8 years.
*Terms and conditions apply.
