Applying for A Business Loan: Why Timing Matters

Whether you’re a micro, medium-scale, or large business entity, if there’s one thing that all business owners will agree on, it is that all businesses require money to go on. Today, there are about 11 Lakh registered companies in India, and all of them are of different sizes and from a different industry. But the most critical factor that binds all of them together is adequate funding whenever required, without which they can all collapse. No matter what domain your business belongs to, you will come across several points in time where you’ll need funds for various reasons. This could be for paying employee salaries, meeting a shortfall in working capital, or even to get your business off the ground. For all these purposes and more, a business loan is a good solution.

But along with knowing the “why” of business loans (the purpose), it is also very important to know the “when” as well. Before applying for an online business loan, you must forecast when you might need funds in the future and prepare for the same. Here are three different scenarios we’ve presented:

1. When You Borrow Too Early

This is a trap you can easily fall into. Since every business needs money to stay afloat and to manage its day-to-day operations, you might think that it’s a good idea to get a business loan “just in case”, with the intent of using it when the need arises. However, there are many risks associated with such a plan. First off, there’s no planning or budgeting involved, both of which need to happen while availing of an online business loan. Secondly, you don’t even know how much money you need. You might end up shouldering a loan only to find out that it’s not enough later! This will only put you in a difficult spot, as you may find it tough to take on another loan. This will also affect your ability to repay the loan you already have.

2. When You Borrow on Time

Borrowing from business loan companies at the right time, i.e., when you need funds will only do you good. In this scenario, you have taken stock of your current situation, know where your business stands, why you need a business loan, and exactly how much you need. So, not only are you taking it for the right reasons, you are also able to meet the purpose for which you’ve taken it – if it’s paying bills, you’ll have paid them in full and on time, and if it’s funding for expanding, you’ll have helped your company grow just when it was needed. Doing so will also put you in a better position to repay the loan on time.

3. When it’s Too Late

You must take every step to make sure that you never find yourself in such a situation. This is possible only with proper planning and accurate forecasting. If you borrow too late, it means that precious days have already passed by where your business was lacking much-needed capital. This puts your company at risk for a financial crisis. You may find it difficult to arrange for working capital and to even manage the company’s daily affairs. Basic yet important payments (like utility payments) might get affected. Your business relationships with your vendors may also be affected, because of your inability to make timely payments.

Wrap Up

From the above article, the natural takeaway is to borrow on time, and only when you need a loan. Doing so before or after can have strong consequences, as you’ve read. If you’re looking for a good online business loan provider, KreditBee is an option you can consider. KreditBee offers personal loans that you can use to fund your business requirements. Their application process is easy to understand, with hassle-free documentation and is also 100% online. All you need to do is download the app, complete your profile, and leave the rest to us. If you wish to learn more about our personal loans, write to us at [email protected] or simply call +080 44 292 200.