Thinking of applying for a business loan for your enterprise? You have to consider whether it is the right time to avail of a business loan or not. There are several banks and non banking financial corporations (NBFCs) which offer business loans to organizations of almost all sizes. You must first figure out whether your business is small, medium or large. The size of the business and annual revenues matter and not the size of your office.
If your organization has less than 100 employees and your annual revenue is lower than Rs.25 crore annually, then you have a small business. A loan is always essential for any business irrespective of its present size. Term loans are usually considered as the best business loan options.
How do you know when it’s the right time to get a business loan?
The best times for you to get a business loan for your organization can be categorized as follows-
- When you do not need a loan at all- While this may sound misleading, the best time to take a business loan is when your organization is doing pretty well and has been running smoothly for more than 2-3 years. This is a great time to take a business loan for meeting growth oriented objectives.
- The best time to take a business loan for any small enterprise is when the organization does well and monthly turnover surpasses Rs.1,50,000 at a minimum level. When you are making profits, you can comfortably sustain a business loan.
- If your age is between 21 and 65, then it is definitely a good time to consider a business loan depending upon your requirements.
- In case someone is already employed but is planning to plunge into full time entrepreneurship, he/she can take a business loan for supporting his/her core idea. Of course, the person has to possess a good employment and credit history.
- The best time to take a business loan is also when you are relatively sure about the future growth and profits of your business.
When is it a bad time to consider a business loan?
You should not consider taking a business loan at the following times –
- When your organization is not doing that well or is not in a good position.
- When your business is less than 2 years old.
- When you are still figuring your way out and are too young to handle the organization’s future responsibilities or the risks that arise from entrepreneurship.
- In case any of your co-applicants for the business loan/partners have a criminal record.
- In case your business has suffered any losses in the recent past or even when your business is profitable but the monthly turnover is lower.
- You have already quit your current job and are unsure about the future potential and possibilities of your business.
These pointers will help you zero in on the best times for applying for a business loan. When it comes to getting a business loan, compare all major providers online in terms of eligibility, requirements, interest rates, tenures and other terms and conditions before taking a final decision.