Getting a Loan: Should You Be Afraid

There is no need to be afraid of loans. If you are afraid of taking a loan for your business, this indicates that you are not confident enough about the business you are going to start. If you are not confident with the business, you should stop immediately and start doing more research and building resources for your business.

I don't think you should be afraid of taking a business loan. If you do not have any funds for investment, if you do not want partners for your business, or if you don't find any partners or investors, a business loan comes in handy. If you have a great business idea and if you can put u a good team, you will surely become successful.

I am always in favor of burrowing money if you are using that money to invest in some profitable program. However, you need to check one important thing, how much interest you are paying for your loan and how much profits you are earning from your investment. Your profit must be bigger than the interest you will be paying for your lender.

Getting a Business Loan

If you have an income source (job or a business) and if you have something that you can give as collateral, you can easily get a house loan in my home country. You can use the loan money to build the house. Even though the bank does not wait for loan repayment until your house is complete, you can use the rent amount to pay the loan when your house is rented.

If you think getting a loan to start a business is a suicidal mission, you either do not know about business or you have no idea what actually is a business loan. Unless you inherited your father's business or you inherited a lot of money that you can use to launch a business, you will always need to borrow money to start a business. If you do not have your own money and if you do not want to get a loan, your business will never materialize. A lot of businesses also fail because they do not have adequate funds. If you have a solid business idea, there is no need to be afraid of loans.

Loan Eligibility: Analyzing Your Credit Score

A credit score tries to analyze your creditworthiness in terms of loan eligibility. Well, there might be other implications of credit score but this one is the most obvious one. You get a credit score by analyzing your debt, existing loan, your total expenses, etc. in relation to the total income you generate per month.

In our country, if you want to get a bank loan, you need to give land, a house, or gold as collateral. There is also a provision to get a loan by using your security of deposit as collateral but this will work only when you have already acquired a certificate of deposit. Recently, the government has introduced a loan where you can use educational certificates as collateral.

In our home country, there is a provision to get a loan if you form a group and the members of the group sign a no objection agreement. This is usually a small loan for small businesses. These loans are given without any collateral mostly by microfinance. sadly, these loans have high interest compared to big banks.

Different Ways to Get a Loan: Banks, Micro Finance, and Private Lenders

You can get a loan from private lenders, however, they charge such a high-interest rate that you will not be able to pay their interest rate, even if you manage to pay interest anyhow, paying back the principal amount will be very difficult. You can get a loan from micro-financial institutions where you do not need collateral, however, they also have comparatively higher interest rates. You can get a loan from the banks, however, you need collateral. Your business also needs to be registered with the local authorities, and your business needs to be already functional. You also need an income source to convince them that you can payback.