How To Take A Rs 50 Lakh Entrepreneurship Loan In India: The Ultimate Guide
If you’re an aspiring entrepreneur with a grand vision and the resolve to make it happen, then you’re in the right place. Whether you’re a budding start-up or have an established business that needs financing, you will need money to take that next step. An entrepreneur loan is what you need.
Acquiring capital from financial institutions is usually expensive and time-consuming, which is why so many people look for ways to get loans without paying much money.
But before you think of approaching any individual or lending institution, check out some other options first. After all, there are plenty of other businesses out there that don’t need a lot of funding to operate. If you want an entrepreneur loan of Rs 50 lakh to raise capital for your business, this article may be of help.
How To Take an Entrepreneur Loan In India?
If you’re planning to get an external entrepreneur loan, keep a few things in mind. Finding out if your business idea is good enough to be successful is crucial. If it’s not, a loan could be a waste of time and effort. It would help to evaluate whether you have the necessary certifications and documents the lender is looking for.
It would be unpleasant to go through the whole process and get denied because you didn’t have the right paperwork. The next thing you need to figure out is the value of the loan you would like to apply for. It’s best to go with a loan amount slightly under what you need so that you can pay it off as soon as possible.
You’re taking on unnecessary risk if you have enough money in the business account to cover the full amount. If you don’t have the funds to pay the loan back, you’ll be even more in trouble.
How To Get A Loan Of Rs 50 Lakh For Entrepreneurship
If you’re taking an entrepreneur loan, you either want to invest in a new business or grow an existing one. In both cases, you need a solid plan to convince the lenders you are approaching. The lender, in most cases, would want to look at the business model. It is done so that they can evaluate the feasibility of your plan and whether it will generate returns.
If they are convinced, you will get the loan without much hassle. Your application may get rejected if they feel the plan may not generate enough profit to pay off the loan. They will also depend on your business’ Company Credit Report when deciding on your loan application.
When you apply for an entrepreneur loan of Rs 50 lakh, the process would be the same as any other loan. However, you work out the various details to check if it works for you.
For example, if you’re planning to get a loan of Rs 50 lakh for five years, your EMIs, assuming the interest to be around 9% would be around Rs 1,03,000. But, if you reduce the repayment tenure of the loan to two years, your EMIs will rise to Rs 2,28,000.
Once you’ve worked out these details, you can easily check whether a loan of this size is feasible. Let’s take the case above. If you take a loan of Rs 50 lakh for two years, will you be able to pay Rs 2,28,000 every month to settle it? You’ll have to put up questions like these to yourself as you try to figure out the details of your entrepreneur loan application.
Documents You Need For an Entrepreneur Loan
- Business plan – A business plan is a blueprint of your proposed business. It should include information on how you will make profits and how long you expect your business to run.
- Audited financials – Your plan should also include information on your finances, including the amount of money spent in the business, how much you have in the account and how much you expect to make. Your financials must be audited, which is why many lenders require you to submit them. It will include your CRR and CIBIL rank.
- Proof of ownership – To establish ownership you must submit the business license or registration documents.
- Proof of solvency – The final thing you need is proof of solvency. It is a document that shows that you have enough money in your bank account to repay the loan.
Things To Consider Before Applying For A Loan
- Interest rate – The interest rate is the cost you must pay for a loan and is usually expressed as a percentage. It depends on the lender and the type of loan you’re getting.
- Repayment period – The repayment period is how long you have to repay the loan. It varies from loan to loan. One lender may be prepared to offer a longer repayment period than another. You must first figure out when you would need to repay Rs 50 lakh and the interest and then approach the lenders accordingly.
- Loan amount – The loan amount is the amount you need to borrow. It would be best if you didn’t borrow more than you need as you will waste a lot of money paying interest. In this case, you know that you want Rs 50 lakh. It will allow you to work out the repayment period and EMIs, two things every applicant must know before finalizing a loan.
- Loan purpose – The loan purpose is the reason you borrow the money. When seeking a loan for an investment in a business, the lender wants to see your plan. That’s why you should lay down the purpose of your loan in clear words.
Finding The Right Lender
Once you’ve determined the type of loan you will be taking and decided on a lender, it’s time to start looking for potential lenders. Many entrepreneur loan providers are online, but you’ll need to be careful when choosing one. You can’t just pick the first one you see.
Many lenders may not approve a large loan of Rs 50 lakh. The best way to find the right lender is to devise a list of your expectations. Whichever lender is willing to offer you a plan closest to your expectations is the one you should work with.
Once you’ve found a lender you’d like to work with, you should send a loan application. You’ll be asked to provide basic information such as your name, email address, phone number, and bank account details.
Bottom Line
Taking an entrepreneur loan is not a piece of cake, especially if you’re starting a new business. Apart from the fact that it’s a huge risk, it’s also very expensive and difficult to get approved for.
The good news is that the entrepreneur loan process can be easier if you find the right lender like Piramal Finance. It is known for its flexible loan programs, which fit the needs of individuals interested in investing in businesses. If you plan to take a loan of Rs 50 lakh, you must check with them for the best possible deals.