what you need to know about startup business loan

Business loans are life saviour for those who have great ideas but do not have enough capital to bring their ideas into reality. In this era where things happen in a wink of an eye, applying and getting a  loan same day has become a reality now. Although it comes with terms and conditions which may require a thorough understanding from the applicant, unlike older times getting your loan money the same day is possible now. One of the reasons is there are many options from where you can take a loan, a large number of banks operate in the same district let alone city. They all offer business loans with slightly different terms and conditions, and in this plethora of options, some services may be offering unsecured business loans.

Applying for a business loan can be a daunting task. It requires a lot of paperwork, authentication, and sometimes even some kind of guarantee. Since your business is still on paper or is just an idea no matter how confident about it you are, the truth it still I a risk. Besides, business loans can be much more expensive than you thought it could be. It is better to acquire some knowledge about a business loan before you sign the application.


The first and foremost question you should be asking yourself is what do I qualify for a business loan, according to bank’s terms and conditions. If a bank is not satisfied and turns your application down, chances are pretty high that other banks would also consider declining you or at least their search would be much thorough. Credit score, cash flow and other qualifying factors should be kept in consideration before you apply for a business loan.

How much?

It is an understood fact that before applying you should have an idea how much do you need, but people often either end up borrowing much more than they need r to borrow less amount. You should have proper budgeting done and have an overview of your expenses you can foresee. The money you borrow is supposed to be returned, and more money means a higher interest rate. Another critical factor is to have a proper estimation about the cash flow your business would be generating in a month. You need to see if you will be able to pay the monthly instalments with the revenue generated by your business. 


Bank need to make sure that their money is in right hands, and they do not take risks. To avoid this bank often need a proof of applicant having a hard asset to back up a loan. Banks carefully look into all the aspects and authenticate that your provided information is right. As much as banks want to make you a client, or if you already then maintain you as a customer, they will still decline your application if you fail to provide any assets that can pledge your business loan.

Well Crafted Business Plan

We are talking about the application of business loans for startups. Although taking a loan for a running business also requires some kind of preparation before applying, those preparations are different. Startup business is not a reality yet, and as much as you are confident about pulling up your idea bank is going to look into all aspects before signing you. Your business is still not reality; the way you present it will make all the difference. It would help if you had a pan that has the potential of answering all your bank’s question. You do not only need to answer their questions, but you are the one who needs them, you should be able to satisfy them. A well-crafted business plan of not likely booming business has higher chances of getting improved than a poor business plan that has the potential to be successful.

Credit Score

The credit score is the primary key that determines the fate of any loan application. People are usually aware of their personal credit score, but applying for a loan is much more than that. Before you apply for a business loan, you need to check if you have any down payments, and if you have your bank will most likely not consider you as a good option. The credit score is the final deciding factor in the approval and dismissal of a business loan application.

Financial Details

A bank is going to ask you for all your business documents, which may go back to the past five years. From your debts, bank accounts, credit card accounts, tax numbers, assets information, to license information and even if you have any outstanding challan payment will come under it. Bank will need a balance sheet, and before applying for a loan, it is vital to get the latest balance sheet prepared. 

Besides this bank will also require your National Identity Card, address and other contact information.

 Bank Terms

Banking is a vast field, despite being a well versed in spoken language, a newbie can get lost reading and conversing with a banker. It is essential to get yourself equipped with the banking terms and know their implications. Many at times bank give an overview of their terms and conditions, deliberately mentioning a few terms subtly. They are some underlying terms, and once you have signed them, you are liable to adhere to them. It is imperative to know what you are getting into because business loans may get more expensive. If you think you are unable to decode and understand these terms have a professional go through your application first and then sign it.


Many options claim that they are providing services catering business loans, but getting a business loan that too for a startup is not a piece of cake. Banks and lenders scrutinize before lending you any money, and if they find anything slightly suspicious, they most likely put you on rejection list. However, bank and lenders earn money through these loans, and they are offering their services to generate money. If you fulfil their criteria of eligibility of business loan they will be more than happy to lend you money. Once you have put the word out that you are considering applying for a business loan, you will be flooded with suggestions, pieces of advice and people’s experiences. It is essential to listen to all of them, but equally important to do your research. Taking a business loan is a considerable risk, and it is only natural of you to be a little nervous before applying for it. The crucial part is doing homework, take care of the above-mentioned steps with diligence, and you are good to go.

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Business Plan Template & Guide for Entrepreneurs [2020 Updated]