Startup Business Loans:

Do you aspire to start your own business? Have you been putting aside your startup plans because of budget constraints? Many entrepreneurs with great business ideas are unable to start their business due to lack of funds. Money is one of the main factors that decide the start and the future of a business. If you have already tapped into your personal savings, borrowed funds against your assets, and are still looking for short-term finance options that cover your operating costs, you do not have to wait anymore!

At KredX, we understand your entrepreneurial spirit. We have helped several businesses access working capital through our invoice discounting solutions.

What is a Startup Business Loan?

A startup business loan is a financing facility offered by banks or other financial institutes to new businesses or those planning on starting one. The funds accumulated through a startup loan can be used for various purposes such as purchasing equipment, furniture, raw materials, or paying for expenses incurred to set a business such as purchasing or leasing a building. 

Sources of Startup Business Loans:

  • Savings: One of the main sources of startup business loans is your savings. You must invest in your own idea. Even if it is a small amount and you need much more capital, this simple step proves that you are serious and fully committed to your business. 
  • Banks Loans: Loans from RBI regulated banks and financial institutions is the most common source of funding for startups. However, due to stringent eligibility and documentation requirements and lengthy loan approval process, startups are now choosing alternative lending options that offer short-term business loans quicker. 
  • Venture Capital: When a startup business demonstrates high potential growth in the long-term, a Venture Capitalist (VC) provides the required capital to the firm— usually in exchange for equity shares. The VC can obtain the required capital through large corporations, influential individuals, or other financial institutions. 
  • Crowdfunding: As startups have difficulty in qualifying for a traditional bank loan, many innovative entrepreneurs opt to crowdfund. Through crowdfunding, one can raise small amounts of capital from numerous individuals who are interested to invest. There are many types of crowdfunding such as equity-based or donation-based. You can choose an option that best suits your business requirements. 
  • Invoice Discounting: If you have unpaid invoices, you can leverage them to get a short-term working capital through invoice discounting. This is the simplest way of financing your startup. At KredX, we help businesses use their unpaid bills to generate the funds they need to launch or manage their business. 

What is Invoice Discounting?

Invoice discounting is a financing option that allows business owners to trade their unpaid invoices to obtain a working capital loan. When a business generates an invoice, a proportion of the total sales amount can be availed as a short-term business loan through this process. Also known as “Bill Discounting”, this facility allows the business owner to unlock working capital required to pay operating expenses quickly. 

How Does Invoice Discounting Work?

KredX is a reputable platform where numerous invoices are traded to access working capital. It is a simple, quick, and hassle-free process. Businesses can upload their unpaid invoices digitally and an investor from the platform will purchase the bill at a discounted price. The approved value of the invoice will be credited to the business bank account with 24 to 72 Hrs*. The best part is— this working capital can be obtained without collateral.

Difference Between Startup Business Loan and Invoice Discounting:

Startup Business Loans

Invoice Discounting

Stringent eligibility criteria. New businesses find difficulty qualifying for a business loan

New businesses can access working capital against their unpaid invoices by meeting simple eligibility requirements

Lengthy loan approval process

Businesses can access the funds within 24 to 72 Hrs* after successful registration

The tenure of a business loan may vary between 30 days to 7 years

The tenure ranges from 30 to 90 days

Impacts the company’s balance sheet

Does not impact the company’s balance sheet as it is not considered as debt.

Requires collateral

Does not require collateral 

How to Secure a Startup Business Loan Through Invoice Discounting?

  1. Businesses are required to register on the KredX platform.
  2. When a sale is made, the registered business generates an invoice that is payable within 30-90 days.
  3. Business digitally uploads the unpaid invoice requesting for working capital.
  4. An investor from KredX platform purchases the invoice at a discounted rate.
  5. The funds are credited to the business bank account within 3 working days.

Eligibility Criteria:

  • The age of the business
  • Minimum credit score that assures creditworthiness
  • Minimum base turnover requirements based on the type of industry
  • The reputation of the clients of the business
  • Number of reputed active clients of the business

Sign Up Now to Check your Eligibility for Bill Discounting Services

    When to Choose Invoice Discounting?

    • When you are working with large commercial clients who insist on longer credit periods.
    • When traditional banks have rejected your business loan application.
    • When you have clients who pay their bills promptly but you are in need of quick cash inflow. 
    • When time is money and you need working capital quickly.
    • If you are trying to build your creditworthiness, availing a short-term working capital through invoice financing and repaying it promptly will improve your credit score. 

    Documents Required: 

    • KYC documents (Identity Proof and Proof of Residence)
    • Registration certificate of the business
    • GST registration certificate and returns
    • Audited financial records
    • Bank statements
    • Credit report
    • Unpaid invoices copy
    • Post-dated cheques

    Frequently Asked Questions on Startup Business Loan:

    A. Startup Business Loan is provided by government-regulated banks and financial institutions to help businesses launch their company. The bank provides the required capital at an interest rate.