When you have decided to start a new business and become an entrepr eneur, you will need to finance your business. You have a choice of either putting in your own money into it, or taking a loan. If you have decided to take a loan, read on…
Whether you are applying to a conventional bank, an NBFC, financial institutions or are looking for a microloan, there are some things you should know…
• Assess your credit history. If you don’t make credit card payments on time, take bank loans etc and take your time paying back, your credit history is considered bad. This can go against you when you apply for a loan.
• A good credit history is one of the most important factors in identifying borrowers who will pay back the loans.
• Have you been filing your Tax returns? The lenders need the assurance that you have been meeting your tax obligations.
• Demonstrate how your business will generate enough to repay the loan. If your business has been making a profit, you can choose to repay from the profits. If you have been running into losses, draw out a convincing plan of how you intend expanding / buying new equipment etc to generate better profits, and use that to repay the loan.
• The net worth of your business should be positive. It should not have outstanding debts.
• Show your savings or assets to convince the lender that you can pay back from personal funds if the need arises.
• Most loans will require a guarantor. Either you can be the guarantor or request someone else to guarantee the loan for you. |
The role and responsibility of entrepreneurs is changing as India changes. This is an important issue to think about, because the nature of entrepreneurship is different in India- it is more complex, complicated and more granular than the West. 
List out business ideas and make your choice. Once you have identified your business idea, find out what you will require eg. Staff, inventory, storage space, communication network, stationary etc 