According to the NASSCOM report 2016, Indian stood number 3 with more number of startup companies. Another survey conducted by Randstad in 2017 found that 83% of Indians showed interest in making their own business. Among that 72% of them belong to the age group 25 to 34 years. From these statistics, it is understood many young Indians are eager to set up a business on their own. This is a great scenario and every Indian should feel proud that we are growing.
But the catch is about the funding, most of the dreaming young entrepreneurs do not know how to start their business. Mainly money is the concern that forefronts preventing them from setting up a business. However, this cannot be a reason anymore as the government has come forward with several small business loans. Also, many private institutions have made this even easier to light up the vision of ambitious young entrepreneurs.
In this article, we will highlight all the benefits offered by the business loan to make the young entrepreneur’s dream come true.
Stop worrying about the process
The major concern business owners have is the time taken to arrange for the money. In the dynamic market condition, one cannot afford to waste time as the business idea will become old before it is launched. This means someone else who is smart in the market with money will start the business and even before you start the business you will have competition. So saving time is very important.
With the advancement in technology, it is possible to get a business loan is not more than 48 hours. Yes, you can apply online with all the details and upload the documents. The verification happens and then your request is approved. Therefore the business loan process is very simple and even you need not do any paperwork. Very minimal documents are required like PAN number, business registration, address proof, ID proof and bank statement to apply for a business loan.
No more nightmares about collateral
Ok, the process is simple and we agree about that. But what about security? Yes, as a young entrepreneur you need money to start a business. It is evident that you do not have savings or a great back up at first when you dream about a business. Then, how will you pledge any asset as collateral to get a business loan? Understanding this, the small business loan is offered without any demands. There is no hidden condition and you can just apply for the loan with the minimal documents and not worry about any background.
You need the skills and a proper business plan to start and not property as a guarantee. This will provide confidence to the young aspiring individuals as they are trusted and no recommendation is required to begin with a business.
The loan tenure at your discretion
Repayment of loan within a particular period is called the tenure of the business loan. While it is understood that developing a business from scratch will take time. Therefore the loan seeker can opt for a flexible time period to repay the loan. It can be anywhere up to 5 years. So there is no tension about loan repayment and the individual can focus on setting up the business with a solid foundation. Still, you need to be aware that the monthly interest payment will continue until you repay the loan. This amount can be adjusted based on your business capacity. Even you can make some prepayment when you get a profit to reduce the loan burden. In short, it is very flexible and hence you need not consider applying for a business loan as a threat.
Flexible Rate of Interest
Again the interest rate varies based on the amount one takes a loan, the loan duration, and the risk of the business. Higher the risk, greater is the interest rate, longer the duration lesser is the rate of interest, etc. There are several combinations with these 3 factors for fixing the interest rate. Young entrepreneurs need not worry about the interest rate as it is well understood before completing the loan process. It is therefore helpful to start-up business; go slow and steady without bothering about the interest rate.
Availing business loan means the borrower must repay some interest amount on a monthly basis. Considering this as expenditure, the government of India has offered a tax rebate. This is a great sign of relief to young entrepreneurs. They are saved from the huge tax burden. Let us explain how this is calculated for you to get an idea about the amount you save in tax due to business loans.
Interest paid on the business loan can be subtracted from the gross income before calculating the tax. This means you can feel glad that the tax slab will come down as your gross income is reduced. Nevertheless, be clear that the principal amount you repay will not come under any tax rebate because you have borrowed it and must repay. Only the interest amount can be considered for a reduction. Still, it is good that you can use the business loan for starting your business and save on tax.
Given these benefits offered by availing the business loan, young entrepreneurs can now stop worrying about funding. They need not depend on any assets from parents or others to start a business. Also, anyone can apply for a loan and it is their legacy for doing so. Up to 1 crore, they can get a loan and that gives them a self-assurance to start any business. All that is required for them is to understand the terms of the business loan properly before applying to avoid any confusion.
Having a vision is the only criteria to start a business and there is no other barrier for the young generation to move up the ladder in their life.
Word of caution: Choose the right funding agency to enjoy these benefits while applying for a business loan. Age is not a barrier to become a successful entrepreneur.