Gold Loan For A Startup? A Way To Finance Your Business
Taking a gold loan for a company is ideal for many business owners. Read to know why gold loan is a new way to finance your business at IIFL finance.
The booming startup ecosystem of India proves that young businesses can flourish exponentially with the right combination of talent, hard work, and financial support. Finance is an essential tool for running any business. But not every startup receives crores of funding. These startups with equally great ideas and innovation often fail to survive beyond their first year. Reason? Lack of liquidity.
This situation leads to startup founders moving the focus from running the business to raising funds which are time-consuming and demotivating. Often, startups with potential consumer interests fail because their cash reserves are insufficient to fulfil the orders.Loans are the most popular solution for raising funds. They can help in establishing, expanding, and even sustaining a business. However, sanctioning a loan requires patience, credit history, and documentation. The lengthy process is often tiring and demotivating for business owners.
Fortunately, applying for a gold loan is the easiest and one of the most practical solutions to address the cash crunch problem. Let’s learn more about a gold loan for business.
What Is A Gold Loan?A gold loan provides the necessary funds to a borrower against gold items. The loan amount is a specific percentage of the total gold value offered as collateral. Taking a gold loan for a company is ideal for many business owners. These business owners are aware of and use the provisions and benefits of gold loans. Here are some reasons and benefits of taking a gold loan for business.
Why Acquire A Gold Loan To Finance Your Business?
1. Minimum DocumentationGetting a gold loan is one of the most hassle-free ways to raise funds. For address proof and identity proof, KYC documents are enough. No other certificate or collateral is required. This discount in documentation is due to the gold, which is the collateral against the loan amount.
A major element otherwise crucial for loans, credit score, is not required for getting a gold loan. Business owners with a lower CIBIL score are also eligible for a gold loan. This way, gold loans take away the tiresome documentation process and help businesses to focus on growth.
2. Rapid Approval And DisbursementDuring any business’s financial emergency, staying afloat is crucial. The prolonged loan approval process does not make the situation any better. Acquiring a gold loan is significantly easy. A few lenders provide approval and disbursal for a gold loan in 30 minutes. There are no specific criteria to avail of the gold loan.
Ideally, only purity and weight are the criteria to get the gold loan approved. The lender then evaluates, ensuring the authenticity of the gold.
3. Provides Working CapitalAs per a CB Insights report, 29% of businesses fail because of a financial crunch. Lack of financial support from big institutions for upcoming startups is one of the many reasons for this failure. A gold loan can work as a real saviour in such a situation.
Business owners can raise funds by keeping their physical gold as collateral. Unlike other funding sources, a gold loan does not require mentioning how and where you spend the funds. Hence, these funds provide working capital to execute orders, pay salaries/rent and even grow the business.
4. Acts As An Emergency FundDeveloping and growing a startup doesn’t have a set timetable. Founders must be ready for any unexpected event that can disrupt business activities. The need to purchase new technology, hire a new person, or purchase raw material for stock sometimes requires a quick decision.
It is challenging to make such time-sensitive decisions when the business is low on cash reserves. Opting for a gold loan to raise funds for emergency expenses for keeping the startup afloat can help take care of operational costs.
5. Highest Security For Your CollateralGold jewellery has more than just monetary worth. Often, these ornaments have been passed down through families and have traditional value. Gold jewellery in Indian culture signifies blessings and honour for prosperity. For the sanctity of what gold jewellery represents, protecting the original form of the jewellery is essential.
While providing gold jewellery as collateral, business owners often worry about the safety of their gold. Reputed banks and NBFCs, provide the highest standard of security for your gold collateral.
Boost Your Business With A Gold Loan By IIFL FinanceIIFL Finance offers a gold loan for startups that require financing to pay for the needs of a new business. It also plays a vital role in covering the initial costs needed to establish your new business. Noteworthy aspects of the business, like working capital, real estate, equipment, supplies, and inventory, can be looked after if there is a firm financial base.
Many consider a gold loan for startup business loans. At the same time, IIFL is the most trusted source that offers high funding amounts, long payback terms, and low rates. Acquire a gold loan from IIFL to kick start your business idea and pave the path to success.
Q.1: What is the main feature of a gold loan?
Ans: The primary characteristic of a gold loan is the minimum paperwork and multiple payment options available.
Q.2: What is the market value offered on the gold?
Ans: The minimum market value is 75%. However, a lender may change it at their discretion.
Q.3: What is the rate of interest on the gold loan for startups?
Ans: The interest rate on the gold loan starts at 7% p.a. without any hidden charges.