Pros and Cons of Availing a Business Loan for Your Startup

Startup loans are the best financing options for entrepreneurs who want to acquire funds for their startups. Such loans help you establish your business with a strong foundation, giving it more potential to grow in the future. However, there are pros and cons to availing of a business loan for your startup. Let's weigh them.

Pros:

• You get easy money to set up your business and conveniently afford the initial costs of inventory, equipment, workplace, staff, and others. 

• When you have enough money to invest in your business, you don't need to give an equity share in return for investors' money.

• When you have a loan to start your business, you don’t need to spend money from your savings. Since startup loans are unsecured, you don’t need to put any asset as collateral as well.

• Regular EMI payments can help you build your credit score, which makes more money available to you as loans in the future.

Cons:

• Business loan eligibility conditions may be hard to fulfil for some borrowers. However, NBFCs like Fullerton India have simple eligibility conditions that anyone can easily fulfil.

• Some borrowers may be worried about EMI payments. However, using a business loan EMI calculator, you can choose a loan term with an EMI amount that fits your monthly budget.

• Missing EMI payments may reduce your credit score and lead to hefty late-payment penalties. You can avoid them by staying consistent with your loan EMIs.

While there are both pros and cons of availing of startup loans, cons can be handled with a little bit of care and determination. Check the lender’s business loan eligibility criteria, provide the required documents, and apply for a loan to fund your startup with confidence.

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