How Availing Business Loan is Beneficial For New Entrepreneurs?

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This decade the business community witnessed immense growth in startup culture in India. With financial assistance and the holistic participation of the government, India has become the third-largest startup ecosystem after the US and UK. India is currently home to over 5000 tech startups.

So, what changes occurred that contributed to the changed business ecosystem scenario?

As we know, funding is vital for any business to begin, thrive, and expand. The financial assistance put forward by banks and other platforms through loans and other schemes has helped young entrepreneurs converge with their business goals. Let’s further delve into the business loan, its eligibility criteria, and its benefits.

What is a Business Loan?

A business loan is financing provided by NBFCs, which are utilized to meet the urgent and growing financial requirements of a business.

Interest Rates and Tenure:

The business loan interest rates provided for NBFCs (Non-Banking Financial Company) vary, wherein interest rates offered range from 8.5% to 24% per annum. The interest rates provided by platforms such as Fullerton India for its customers is 17-21%. The interest rates offered relies on the tenure, loan amount, net income of the company, location of operation, business stability, and the collateral submitted.

Business Loan Eligibility

While opting for ‘Online business loan apply’ facilities through online accounts, there are specific eligibility criteria that need to be satisfied for its approval. Although the requirements vary from lender to lender, here is a list of the eligibility criteria of Fullerton India.

  1. Applicant should have engaged in the current business for at least three years and should possess a total five-year business experience
  2. The applicant should be at least 22 years old and should be less than 65 years old at the time of maturity
  3. The minimum turnover of the enterprise should be Rs. 10 Lakhs
  4. The company should possess a fair share of profits in the last two years
  5. The company should have a minimal annual income (ITR) of Rs. 2 Lakhs per year

For loan requirements of above Rs. 50 Lakhs, eligibility criteria differ, and the loans are offered against secured property.

Online Business Loan: A Viable Option for Entrepreneurs

After the advent of the Startup India campaign in 2015, there has been a sharp rise in the number of startup ventures. Business loans in India are robust financial aid, especially for new entrepreneurs, for their businesses to converge with their goals and rise in the market competition. Listed below are some of the benefits:

  1. Funds from options such as capital venture can prove to be quite expensive, especially for new entrepreneurs. It is because these investors can demand up to 5 to 10 times on the return of their investment. However, NBFC does not require dilution of equity, and their return is fixed at a nominal interest rate.
  2. It is easier to approach and obtain a loan from NBFC. Given the number of NBFC in India, the process of availing is also simplified.
  3. Financial institutions often put forward structured schemes to fund different requirements of the business. Unlike capital investors, loans are approved and processed quickly at banks.
  4. Financial institutions do not devour the profits of the company, and business belongs solely to the borrower.
  5. Young entrepreneurs can also get tax relief for three years.

Conclusion

Startups and young entrepreneurs are the new contributors to the economic growth in India. With ideal conditions provided by the government for the business community to thrive, procuring a business loan can help entrepreneurs coincide with their business goals.

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