As per economic analysts, India is expected to be a $5 Trillion economy by 2025 with the contribution of its small and medium enterprises. These SMEs have successfully adjusted with advanced technology and have been able to boost their revenue by 60% with the help of mobile applications.
Most of them also maintain specific software that makes their work fast and reduces hefty paperwork and increases efficiency.
However, such updating may be a challenge for you if you lack the required funds. You can avail start up loans, which specific financial institutions and NBFCs provide, to raise funds for your business venture.
A start-up is different from small and medium enterprises in terms of funding, vintage, risk factor, etc. Thus, it is crucial for you to know the difference between a start-up and an SME before you avail any advances. Read below to know exactly when you should begin fundraising for your start-up.
1. You have a ‘full-proof’ plan
Prior to looking for funding options to raise capital, do make sure you have a concrete strategy. Analyse your firm’s vision and set goals for yourself. Try to estimate your sales and the profits you can make in the foreseeable future. A proper estimation of your profit will also help in planning the repayment of your start-up loans.
2. When you gain a good customer base
Don’t raise funds until and unless you have a strong customer base. Your customer base is your source of income. Start providing your services as a freelancer or pre-sell your products to analyse public acceptance and begin raising funds once you have a proper grip on the market and a strong client base.
3. Have another source of income
There is no rule stating that you have to quit your job if you plan your start-up. Having another source of income can contribute to your business finance. If you have availed a loan for your firm, then your salary can assist you in paying your monthly instalments without straining your budget. Your income can also work as your working capital that helps your business stay agile.
4. You have skilled employees
Plan availing start-up loans for raising funds after you have employees capable enough to bring in adequate profits for your firm. This would ensure liquidity, and you can avoid defaulting payments.
5. At the time of expansion
Once your start-up starts gaining profits, you can arrange for business loan to plan the development of your firm. You can either shift to a different location or rent a spacious set-up in the same area. You may follow expert tips to expand your business to another city.
These pre-approved offers will also help you in availing a business loan at lower interest rates, which can make your EMIs affordable, thus reducing the burden. The application process for such loans is convenient, and you can do so online. To apply, head to your lender’s official website and fill the application form with the required details. A representative of your lender will visit you to collect the required documents, and the amount will be disbursed accordingly.
Besides the above points, do make sure you know how to handle the funds you have accumulated. Invest in areas which need more attention. Also, don’t raise more funds than you need as it would only increase your financial burden.