Financial institutions offer various loans to businesses to start and grow. While getting that loan can be a challenge, a personal loan provides easy and quick money to fund urgent business needs without any collateral. However, if not managed properly, your business could find itself under a heavy debt burden which could make it difficult to get business credit in future.
10 Things To Consider while funding Your Business With A Personal Loan
Starting a business can be a costly affair, so banking institutions and NBFCs offer various options to start-ups. One popular option that helps entrepreneurs to retain their equity while also receiving funds is a Fullerton India personal loan Online. Let us see what you should know about a personal loan.
- Know why you need the money: Do not just blindly borrow money. Make sure to understand why you need the money and where you will be using it. It will help you manage the amount properly without sending it in unnecessary luxuries.
- Borrow what you need only: Jot down all the investments and infrastructure or any other cost you may have to take care of when starting or growing your business. It will give you an estimate of the amount you need to borrow. Make sure that you are taking a loan of the same amount. Anything less than that will hamper your business growth, and more than that may cause you unnecessary financial trouble.
- Have a repayment plan: Getting a personal loan is easy, but it is the repayment where the actual struggle begins. So before borrowing, have a repayment plan in place. You can use the Fullerton India EMI calculator to know the monthly payment you have to give. It will help you in making a repayment plan.
- Check for the right lenders: There are various lenders available both digitally and offline, offering different loan terms based on your credit score and other personal and professional details. Before you apply for the loan, make sure to check with various lenders, compare their terms and then apply for the Fullerton India Personal loan online.
- Apply with a co-applicant: The maximum personal loan an individual can get depends on his eligibility. Thus, if the amount you need is more than what you are actually eligible for, applying with a co-applicant can help.
- You have to repay the loan irrespective of how your business performs: As this is a personal loan, the loan sanction does not mention anything about business performance. Whether your business is doing great or not performing as per the expectation, you need to repay the loan in the form of small EMIs.
- Make sure you are eligible: Personal loans are only offered to individuals who have a stable income source. Thus, if you need money to start a business, and you don’t have any other source of income, you may consider asking a family member with a good credit score and stable income apply on your behalf. Also, before applying for a loan, check the basic eligibility criteria and use the Fullerton India Personal Loan Eligibility Calculator tool. It will help you in making an informed decision. If your credit score is low, it would be advisable to focus on improving your CIBIL score before applying for the loan as it is an important factor for determining the interest rate of the loan and the tenure.
- Understand the loan terms: Before finalising the loan, make sure to thoroughly understand the loan terms being offered. Apart from interest rates, it would also be a good idea to understand other costs such as processing fees, insurance charges, etc.
- Check for tax benefits: Some loans also help in reducing your tax burden. Personal loans do not fall under this category, no matter what you borrow the amount for.
- Do not Borrow to build: Do not take a loan to invest, as that will not give you any revenue. You should only borrow when you are confident of having a stable income within which the EMI payments can be easily managed for the entire duration of the loan tenure.
These are some points you can keep in mind and check with your lender before taking a personal loan for your business. Do not forget that there are various other options to fund your business, like equity sharing, so it is important that you weigh all the options and then choose which one you want to go to.