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20 Jul
  • Editorial Team

It's a millennial world today. In the global population of 7.4 million, 27% or about 2 billion are millennial. It's not just their population strength that makes them remarkable. Millennial are also the most educated generation to date. Owing to their soaring ambitions, headstrong attitude, robust educational background and a tendency to think uniquely, millennial comprise a promising breed of entrepreneurs. In fact, according to the 2016 BNP Paribas Global Entrepreneurs Report, millennial people are starting businesses at younger ages than their counterparts in previous generations. This implies that they are more eager to start businesses and more than ready to take up risks and challenges.

Interestingly, according to a study by the US Chambers of Commerce, millennial believe that the ability to get a loan or credit is the biggest challenge to starting a business. Almost two-thirds of the millennial surveyed were unable to receive enough support from lenders. Here is a comprehensive guide for millennial to prepare themselves for a business loan and let their entrepreneurship dreams soar.

Eligibility Criteria

  1. Age limit: For getting a business loan, the millennial applicant must be older than 21 years of age.

  2. Collateral: Collateral is something which the lender keeps as an assurance to cover up the losses in case you default on the loan repayment. Collateral can be in the form of residential, commercial or industrial property and even liquid securities.

  3. Business Plan: Do a SWOT analysis, keep alternate plans in the picture, assess growth plans and your financial planning for investments in the business and projected profits must be impressive.

  4. Financial Performance Details: Lenders usually ask for the balance sheet of the company, cash flow statement, profit and loss accounts, statutory audit report and tax audit reports. These have to be from the last 3 years in audited/provisional financials.

  5. Tax Return Details: Lenders ask for one year income tax returns of your company to assess your eligibility for the loan.


Small Business Loans Available for Millennial Entrepreneurs

  1. Loan against Property: This is a form of loan disbursed by the lender against the mortgage of a property owned by the applicant. The loan amount disbursed is a certain percentage of the property's market value, usually around 60 percent.

  2. Working Capital Loan: A working capital loan is a loan that is obtained to finance the day-to-day operations of a business. Working capital loans are not employed to buy long-term assets or investments for the business but are used to cover accounts payable, wages, running day-to-day operations, etc.

  3. Bill Discounting: Bill discounting is a type of loan that enables payments to take place without disturbing the cash cycle as this type of loan allows the business to opt for loans against the bills or invoices raised. This type of loan strengthens cash flow and enables quick processing.

  4. Invoice Discounting: Invoice discounting provides the business owner with prompt access to cash tied up in the outstanding invoices. An invoice discounting facility adjusts with the business as it alters and increases, making it much more workable than an overdraft or a loan.

  5. Machinery Term Loans: This type of loan is a suitable option for leveraging the assets of the company in order to re-structure prior term loans or to obtain extra equipment. The machinery term loan is generally secured against the machinery or the asset that is being financed.

  6. Project & Acquisition Finance: This is a structured type of financing based on the projected cash flows of the business rather than the balance sheets of the business.

  7. Debt Consolidation: Debt consolidation is a type of debt refinancing that requires taking out one loan to pay off many others. Debt consolidation can help millennial entrepreneurs by lowering monthly payment, allowing additional borrowing, simplifying cash flow management and freeing up the revolving credit lines.

  8. Secured Term Loan: A secured loan is a loan in which the borrower commits some asset like a car or a property as collateral for the loan, which later becomes a secured debt owed to the bank that provides the loan.

Things to Consider Before Applying for Loan

  1. Business Scope: As an entrepreneur, your business is your baby and you know about it inside out. Access the business scope honestly and then decide whether you can afford a loan based on your business planning.

  2. Collateral: Collateral is a property you own against which you can take a loan. In case of payment failure, the bank can even claim the property. So make up your mind and be aware of the risk associated with the collateral.

  3. Credit Score: Your credit score can make or break your loan application. With a flimsy credit score, the banks can reject your loan application. So assess your credit score and try to improve it.

  4. Financial Statements: Make sure that your business’s financial statements are clear, there are no mistakes or errors and that everything is in order.

Prepare for a business loan keeping the above guidelines in mind and fuel your entrepreneurial goals. Millennial are the promising future of the world and those who dare to make a difference will surely succeed.

Did You Know


The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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