It is no secret that the tier 2 cities have been emerging as the fastest-growing economies within India. While starting a business in a major city has its advantages, economic growth and opportunities in metropolises have been on the brink of saturation over the past decade. But, the tier 2 cities continue to be untapped assets of the country with the availability of land, skilled labor and ample growth opportunities.
If you aspire to start a business venture in a tier two city, you will likely apply for a loan to finance your enterprise. Here are a few things to keep in mind before availing of a business loan in a tier 2 city.
Keep your business plan ready
For your businessfinance application to be approved, you must have a concrete business plan. Start-ups in a tier 2 city must develop an on-ground model before approaching investors. Lending institutions have now penetrated the tier 2 cities in the country, and new credit profiling methods have been developed. Having a business plan will help potential investors decide whether investing in your venture will be fruitful.
Additional Read: Things you should know for a Great Business Plan
When you begin your business in a metropolitan city, yours will be one of many such ventures and getting in the spotlight might be quite difficult. In a tier-2 city, exclusivity is the key. Therefore, start big, grab potential customers’ attention instantly, and be identified as a robust and reliable player.
So, while applying for a loan, keep in mind the expenses involved in kick starting your business. Secure a loan at reasonable business loan interest rates to stay within budget even when you grandly launch your business.
Know the available loan options
To ensure a steady flow of funds for your business, choose a business loan structure most suitable for you. Meaning, if you need a lump sum to fund your business needs, term loans should suffice. If you need a small amount of funds and are looking for a shorter repayment tenure, avail short-term loans. Personal loans and equipment loans are also good options suitable for financing a start-up. Before applying, check your business loan eligibility for the perfect loan solution to sustain your business.
Maintain a good credit score
Having a high credit score can fast track the borrowing process and help you secure a higher loan amount with lower interest rates. A good credit score exhibits your credibility and increases the chances of loan approval.
While starting a business, you will need excess funds for buying capital or renting factory spaces. A high credit score will help you negotiate a higher loan amount as well as lower interest rates to meet these expenses.
Additional Read: Tips to Improve your Credit Score to Get Business Loan
Need help selecting the perfect loan for your start-up in a tier 2 city? Tata Capital is here to assist you in your journey. We offer businessfinance at attractive interest rates with flexible tenures and easy repayment options.
Before applying, you can also use our business loan EMI calculator to check your potential monthly instalments by logging on to our website.
To know more, reach out to us today!