Top 8 Financial Habits that will Help You to Get a Business Loan Easily
Statistics confirm that only 5 % of the business startup in India succeeds. 90% of them fail and 50% fail within the first four years. This will certainly be a threat factor for all of the dreaming entrepreneurs.
But, you can always part of the 5% business owners who succeeded. Increase that to 90%, by following some disciplines initially, and make that as your financial habit eventually. This will help you to get a business loan easily to establish and expand your business continuously.
Before you read our expert’s suggestion about the top 8 financial habits, find the data given by CBINSIGHTs about the reason why a business fails. The majority of the reasons include poor financial management. Hence we have summarized the most important habits that will help you not just sail through the business but to apply for a business loan and enjoy its benefits.
Image Source – CB INSIGHTS
- Know your business
Understand your business. Just don’t dream for a business but do thorough research about your business. What is your strength in managing the business and how your business will help you must be identified before you start a business? Without knowing anything about the business, if you start, then be sure of failing. To apply for a business loan, understanding the business is the first step.
- Know the market
Next, understand the market in which you want to start your business. Knowing the business alone cannot help when you aren’t aware of the market. For example, you know the in and out of clothes business and just start one. But the market preference is the area where you lack knowledge. This will certainly lead to disappointment. You might get a business loan for the first time but when you don’t repay, and then you will not get it the subsequent times. Therefore understand the market to grow your business for getting a business loan.
- Know your lenders
Analyze the lenders in the market. There are several channels open for offering business loan namely banks, private lenders, financial institutions, etc. The catch is to know the pros and the cons before you get committed. Banks will offer loan and they are indeed secured. But can you survive with their strict terms? Ok, private lenders do not have many conditions and will provide loan for any amount. However, they will deceive you as they do not follow any RBI guidelines. The best option is to get in touch with financial institutions that are flexible, reliable and customer friendly.
Where do you find one is the question now revolving in your mind and we have an answer? Just talk to us and we will guide you.
- Know your credit score
While we agree that credit score alone is not the deciding factor for getting a business loan. But they play a significant role in projecting your financial status to the lender. Therefore you need to know how to maintain a good credit score. There is no shortcut and you need to pay bills on time. Make a habit of paying EMI promptly. Automatically you seed the trust with the lender.
- Know your limits
Ensure you are aware of your financial limits. Do not overboard. Start small to grow big. Understanding the limits of the business and the market also will help. Beyond understanding make a plan to transfer EMI and bills on-time by automatic transfer. This will prevent any due in payment.
- Know the difference between personal need and professional need
This is another important factor to be considered by people who start a small business at home and in small places. They may not have control between personal and professional needs. Do not use the money borrowed for the business purpose for your personal needs. We know that you are going to repay at the end and it is up to you to spend the money. But, spending for a personal purpose might not fetch you any profit and is a mere expenditure. On the other hand, when you spend for your business you will get some returns which will help you repay the loan. Repaying loans is the only way to get a loan in the future.
- Know the risk factor
It is good to be optimistic. You see all the positives from the business and apply for a loan. You get the loan and succeed in your business. Repayment of the loan is also done onetime and you are enjoying and becoming overconfident. Did you think about the flip side? What if there is a natural calamity that sinks your business. What will happen if there is a personal issue or a problem in the market due to change in the government etc? There are several risk factors that will prevent you from succeeding. We are not asking you to panic thinking about negatives but suggesting you be prepared. Always have a PLAN B to not let any risk affect your business.
- Know when you need a business loan the most
This is again an important criterion to consider when applying for a loan. There are ways to arrange for funding for your business. You can save some percentage for profit for reinvesting in the business. Plan to use revenue you generated by conducting a onetime event. For example, if you have an online business, then provide a sale and use the profit from that for business expansion. This will be an addition to your routine business. Do not jump into the conclusion of applying for a business loan every time. Make sure when you really need it and apply it to offload EMI burden.
A successful business does not only lie with healthy finance but with healthy financial habits, you follow too. Follow the simple suggestions given to manage your fund. Do not apply for several loans at the same time without knowing your cash flow. Before applying for loan understand how you can repay, how much and when. We want you to be confident but not overconfident. Take every step by carefully analyzing your personal and market situation.
The last cent from us is, take a firm decision to make some financial savings to help you only during a crisis. That backup will give you comfort and allow you to focus on the business. This uninterrupted focus alone will help you achieve greater heights. Then trust us, you need not look for financiers to apply for a business loan, but they will come in search of you.
Follow these recommendations first and slowly make them your habit to become a successful industrialist.
So, if you are looking for a hassle-free business loan then visit us at www.flexiloans.com to get a quick quote and apply for a business loan in a few simple steps.