5 Rules young entrepreneurs should keep in mind before applying for business loans for their startup

For budding entrepreneurs, who want to launch their startups, a working capital is very crucial. Besides the idea, plan, and execution, one crucial aspect of setting up a business is capital.

As far as the startups are concerned, the first phase is to establish the business and start generating revenue, even when they have started doing so, they have to expand rapidly so that can take it to a sustainable level.

Once the business model has started working, making it sustainable and profitable becomes important, which is indeed the tough part.

“The transition from first phase to second phase is difficult. Many startups fail at this level. Those who succeed have a strong reason behind this and that reason is availability of easy finance to run day to day operations and manage to do expansion,” said Rajesh Gupta, Director, Cash Suvidha.

Many young entrepreneurs then opt for a business loan. There are a lot of financial companies that back startup owners with money. But, many a times, a business loan also gets rejected.

“This can happen due to several reasons, such as not maintaining the accounts properly and working mainly in cash to avoid taxation, not filling ITR, not making a business plan and lack of long term vision. The other reason is not maintaining the healthy credit score knowingly or unknowingly,” said Gupta.

It is important for young entrepreneurs to understand that it is very easy to find out the abnormalities in repayment of loans taken by them in the past. You have to be careful in order to get a business loan easily.

These are the five rules that young entrepreneurs should keep in mind while getting a loan.

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