Being an entrepreneur is more about creativity than financial pursuits. Successful enterprises are started with an innovative idea that grows to become a viable product or service. Such products or services can either be a means to fulfil the requirements of the day or a means to create an entirely new market. In both cases, creative ideas and continued innovation thrive whereas half-baked schemes are often unsuccessful.
However, it is also true that every great business idea needs funding to make it into reality. Every new entrepreneur faces the problem of business finance when giving shape to his/her first business idea. While self-funding can help sustain the startup for a short time, scaling it up to full potential requires additional funding.
To fund or not to fund? It is one of the crucial questions faced by an entrepreneur. If the business idea is viable then it would need funding for growth and if the initial launch has not drawn the expected response, either it needs strategic tuning or needs to be abandoned altogether. In both cases, the funding is most likely secured through a short-term debt, such as a small business loan, before the business can be pitched to investors for future funding.
In today’s post, we have summarized 3 tips by startup experts that can help you decide when you should apply for a small business loan for your startup business.
Tip 1: When your answer is ‘yes’ to these three questions
Honest determination of the following queries will help you determine the strength of your idea and its feasibility in the existing market conditions. If you can positively answer these three questions then you should definitely go ahead and apply for a startup business loan.
- Do you have a unique business idea which addresses a genuine customer need or requirement?
- Can your idea be achieved through current technology and marketed within the next 12 to 18 months?
- Is your management team capable enough to make the idea into a reality?
If your answer to each and every question posed above is a definite ‘yes’ then perhaps it is time for you to start looking for business loans online.
Tip 2: When you have a runway for at least a couple of years of operation
No business, small or big, is built in a day. An enterprising mind needs to think ahead about the things that are to be achieved in the near term i.e. 2 to 3 years down the road. For that, you need a clear analysis of your finances and operational capacity and add the runway that will be provided by the small business loan to it. If your runway is exhausted before the minimum 2 years required, you need to re-analyze the targets or the finances, whichever suits your needs.
Taking a loan that is too small for actualizing your business plans will leave you stuck in the middle with a risk of losing everything that was planned. Similarly, a loan that is too large may leave you with a debt that your business and personal finance could not service.
Tip 3: You are absolutely sure of the market demand for your product or service
As discussed above, the initial phase of operations lets you know about the shortcomings of your product or services. This allows you to realign the enterprise to better suit the customers’ needs. This phase of trial and error takes some time but eventually helps you in making your product market-worthy.
So, it is recommended that the concern of funding should be raised only after this period is over and the product or service is ready to fill the demand in the market. Raising money too early will have you burning the cash on unnecessary expenses, hence increasing your initial losses, which can sometimes lead to a premature end of an enterprise.
Once you have found the business model that works, you can move ahead with raising funding through business finance.
Lendingkart Small Business Loans for Startups
Once you are done setting up the business, answering the three crucial questions, laying out the roadmap, and finalizing the business model, getting a business loan for startups become easier. Non-banking financial companies like Lendingkart have financial products and services designed for today’s fast business environment. For instance, you can get a business loan online within 3 days of application from Lendingkart Finance.
These unsecured business loans are offered for a period up to 2 years with a principal value of up to ₹ 2 crores. The loan interest rates are determined through proprietary business analytics which makes the whole process transparent and fast. Furthermore, a startup business can repay the loan in easy monthly instalments or repay the loan early through bi-weekly payments. Lendingkart also promises zero prepayment penalty if you decide to settle the debt early through a one-time payment after servicing the first EMI.
To be eligible for a startup business loan from Lendingkart, your enterprise needs to be operational for a minimum period of 6-months. To know more about our startup business loans and check out the complete eligibility criteria, visit us at www.lendingkart.com.