Being an entrepreneur is more about creativity than financial pursuits. Successful enterprises have started with an innovative idea that grows to become a viable product or service. Such products or services can either be a means to fulfill the day’s requirements or a means to create an entirely new market. In both cases, creative ideas and continued innovation thrive.
However, it is also valid that every great business idea needs funding to make it into reality. Every new entrepreneur faces financial hurdles 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 demands additional funding.
To take business loans or not? It is one of the fundamental questions encountered 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, funding is most likely secured through short-term debt, such as small business funding.
In today’s article, we have summed three tips by startup experts that can help you decide when you should apply for small business loans for your startup business.
Tip 1: When your response is ‘yes’ to these three questions
If you can confidently answer these three questions, then you should go ahead and apply for a startup loan.
- Do you have a unique business idea that addresses a genuine customer need or requirement?
- Can your concept be achieved through current technology and marketed within the next few months?
- Is your management team capable enough to make the idea into a reality?
If your answer to the above questions is ‘yes,’ then perhaps it is time for you to start looking for loans.
Tip 2: When you have a thorough idea about the things to be achieved in the near term
No business, small or big, is built in a day. Entrepreneurs must always have a thorough idea about the things to be achieved in the near term.
For that, you need a clear analysis of your finances and operational capacity. If you have not been able to make any profits after 3-5 years of starting your business, you will need to revamp your strategies.
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 sure of the market demand for your product or service
As discussed above, the initial phase of operations lets you know about your product or services’ shortcomings. This allows you to realign the enterprise to suit the customers’ needs better. This phase of trial and error takes some time but eventually helps you in making your product market-worthy.
So, it is recommended that funding concerns 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 small business loans.
OfBusiness Unsecured Business Loans
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 becomes
easier. OfBusiness has financial products and services designed for today’s fast business
environment. For instance, you can get a business loan online within three days of
application from us. These unsecured loans are offered up to ₹ two crores. Furthermore,
the business can repay the loan based on the tenure they choose.