Small and medium businesses form the backbone of our economy by contributing significantly to the overall growth of the country’s GDP. What is for this sector is immense growth opportunities, availability of resources, manpower etc., and a chance to scale up within a short period of time. The typical problems faced by this sector looms around the lack of finance and credit opportunities that can prove to be a hinderance in the growth of business, access to talent and modernization. Whether you are a gym owner or a transport operator or a rental service provider of sorts, the issues are typical for this kind of a setup.
-Ambition of growing and scaling up
-Lack of Access to easy credit facility
-Micro-monitoring, leaving little or no time for bigger plans
-meeting operating costs and administrative expenses
Loans for start up businesses allows newer companies to borrow funds from conventional sources
Whether it is for capital expenses, recruiting new people or adding space and infrastructure, taking loans is a good way to start. Most of the banks and financial institutions offer loan through their branches or online and some even have a one-minute application loans. Having said so, there is very minimal documentation involved and some even provide collateral-free loans up to a loan amount. To put them all in a nutshell, the following aspects are the key highlights of a start-up loans-
-There is minimal documentation involved
-Prospective applicants must prove their creditworthiness and credit history. In other words, they should have a good credit rating.
-Competitive interest rates and flexible interest rates-all dependent on the credit history
-flexible payment options and ease of repayment
-financial institutions provide for collateral-free loans and do not usually ask for security
-timely and efficient communication with customers through mails, SMSs, webchat etc.
Approaching banks and financial institutions for a start-up loan
Approaching the institution for the right kind of loan is the key for getting funding for your business. During the process:-
-make sure you have all the necessary documents required for the loan
-a strong business plan that can show growth and scalability in the near-term and from a long-term perspective
-A clear estimate of the funds required outlining the purpose and the use of funds
-Details of the goals and objectives of the business indicating the growth potentials and venture and the potential returns that can be expected
Availing a start-up loan? Key documents required
Proof that you want to avail loan for the right cause and solid documentation to show that you have the creditworthiness to avail and repay the loan, sums up for what is required of you before you approach a bank for the loan. The key list of documents involved for the process include-
-Age proof and identity proof such as PAN Card, Aadhaar Card
-Proof of address like Driving license, Passport, Aadhar Card
-Credit history and credit rating
-Bank statements for a period of 6 months preceding the date of application
-PAN Card for company or firm
-Certified copy of the Memorandum of Association and Articles of Association
-Income Tax returns
Availing start-up loan or funding through the organized financial sector such as banks and other financial companies is relatively easy. The process is simple too. Individuals applying for the start up loans should take care to maintain the creditworthiness and have proper proof outlining the purpose of the loan applied. It is equally important to show that you have enough means and methods to ensure repayment of loan as well as take care of the other expenses incurred during business.