Finance Your Logistics Startup Idea with Business Loan
Logistics has always played a vital role in trade. Logistics is the part where you handle the operations. Supply of goods on time and in good shape is the goal here. Recently its need seems to be increasing. Customers can now order goods directly to their homes. Thus, there is a growing need to keep the supply chain smooth and steady. And to ensure this, you need the right business financing.
Lately, there are numerous sources to finance your business. All of them vary in their ease of use. One of the most popular and easiest ones is taking a business loan.
Why do you need a Business loan?
It is understandable if you are doubtful about taking a business loan. Most middle-class families think of it that way. But taking a small business loan is completely normal for a firm. Here are some of the reasons you might be benefited from taking a business loan.
I. Expanding your Business
The most common way to grow a business is to reinvest the profits. But this is a slow and gradual process. This may take you years. To expand your business now, you can take a business loan. Expansion might mean that you would require capital. This capital can be arranged with the help of a loan.
II. Regular Cash Flow
Sometimes you face a cash crunch. Even during covid, many businesses face such a problem. A logistics business may not always get paid at the time of delivery. Sometimes there might be a gap between the delivery and the payment. A small business loan can be taken to overcome such situations.
III. Working Capital Requirements
You might get a large order. In this case, you might need to rent more trucks. Or you might need to hire drivers. In such a case you would need cash until you get paid. By taking a business loan you can finance your short-term requirements.
IV. Building Credit Score
When you are a new startup owner, you might take up a small business loan. Regular payment of this would help you build your credibility. So, whenever you will need a bigger loan in the future, you can show your brilliant credit history.
How to Get a Business Loan Application Passed?
To get your business financed you would need to comply with the regulations. To secure yourself a business loan, follow these steps:
I. Create a Business Plan
It becomes vital to the lender that you have a profitable venture. So prepare your business plan thoroughly. You must include your objectives. The plan should show your revenue-generating streams. This would assure the bank that you can repay the loan.
II. Have Your Documentation Ready
To get your business loan application approved, ready all your documents. Make sure you have all your documents with you before applying. The entity’s evidence, most recent income tax returns, audit reports, KYC paperwork, bank statements, etc. are among the documentation that lenders seek.
III. Research All Your Options
Different institutes have different criteria to assess your business. You have the option to look beyond conventional lenders too. Non-Banking Financial Institutes(NBFIs) and digital lenders are also some options. Compare these options. Choose the one most suitable to your needs.
IV. Identify what the Lender Assesses
Always research what the lender sees as a risk. Identify the problem area. By working on these areas, you’ll be able to minimize the interest rate. For example, lenders often look out for defaults in your credit history or inconsistent revenue. Ensure that your logistics business is free of such markers.
Eligibility Criteria
Different lending institutes have different eligibility criteria. Usually, the following qualifications are initially checked:
- Minimum Turnover: Rupees 10 lakh
- Age Requirements: Above 21 and below 65 years old
- Business Activeness: 2-3 years
- Credit Score Value (Credit Information Bureau (India) Limited): 700-900
Documents needed for Business Loan
As listed above it is very important to have all the documents required to get a business loan. Various businesses have various needs. documents required for a loan application mostly remain the same. Let’s discuss in detail which documents you would need in the process.
First of all the form should be accompanied by a recent passport-sized photograph.
Other requirements are:
KYC Documents
This includes Aadhar Card, Drivers License, Voter ID card, and Pan Card. It also includes address proof. This can be your passport, utility bill, rent agreement, etc. You would also need a bank account statement for the last six months.
Proof of Business Documents
You would also need documents to prove the existence of your business. This consists of proof of business documents, a return of GST statement, two years of income tax returns, registration documents, and the business address.
Primarily, the form must be filled accurately with a recently clicked passport-size picture.
To Conclude
Startups in the logistics industry incur a lot of operating costs. As a result, you also require money for capital expenditure. To operate your business and grow it, you often need a loan. Here is where a business loan would be beneficial.
Business financing is important because of the time gap. A logistics company typically waits a while before receiving payment from its customers. But in the meanwhile, it has to pay its suppliers, staff, and merchants. It may become considerably more difficult for logistics companies to pay their debts if clients’ payments are delayed.
So, if you own a logistics business and need money for expansion or more immediate needs, you should think about getting a business loan from a reputable bank or lending institution.
When in doubt, think about speaking with Piramal Finance.
Piramal Finance is a top-notch source of funding. They also provide professionals and business owners with specialized lending alternatives. Look at their free credit report tool. You can calculate how much you need to borrow and how much you must pay in EMIs with the aid of their specialists.
Check out the Piramal Finance Website now and find answers to all your financial queries.