A Business Loan is a type of financing that is specifically curated for business owners and micro, small, and medium enterprises (MSMEs). It is a lump sum of money that a business can borrow from a bank or other financial institution, which must be paid back with interest over a set period of time.
Business Loans are often used to help finance a variety of business-related expenses, including purchasing inventory or equipment, expanding operations, or covering cash flow gaps. The terms of a business loan, including the interest rate and repayment schedule, will depend on the lender, the amount borrowed, and the creditworthiness of the borrower.
Before applying for the loan, you can consider these tips to get approval for your Business Loan faster.
- Start with a solid business plan: Before applying for a loan, it is essential to have a well-developed business plan. This plan should include your business’s current state, your goals for the future, your financial projections, and your strategies for achieving those goals. Having a solid plan in place can help you convince lenders that your business is viable and that you are a responsible borrower.
- Prepare all necessary documentation: Lenders will want to see a range of financial documents, such as tax returns, bank statements, and profit and loss statements. It’s essential to prepare all necessary documentation in advance and ensure that it is accurate and up-to-date. Having a complete and organized file of financial information will demonstrate that you are a responsible borrower and help the lender make an informed decision about your loan application.
- Know your credit score and history: Your credit score and history play a significant role in determining whether or not you will be approved for a loan. It’s important to know your credit score and history before applying for a loan, as this will give you an idea of what to expect in terms of interest rates and other loan terms. If your credit score is low, take steps to improve it before applying for a loan.
- Be realistic about what you can afford: Before applying for a loan, it’s important to have a clear understanding of your business’s cash flow and financial obligations. Be realistic about what you can afford to borrow and how much you can realistically repay each month. This will help you avoid taking on more debt than you can handle and increase your chances of being approved for a loan.
- Shop around for the best rates: Don’t settle for the first loan offer that comes your way. Research and compare rates and terms from multiple lending institutions to find the best deal that suits you. This will help you save money over the life of the loan and ensure that you are getting the best possible deal for your business.
Business Loan eligibility criteria
|Age||The borrower should be 24 years old at the time of loan origin and 65 years old (maximum) at the time of loan maturity|
|Business Vintage||The borrower’s business should have a business vintage of at least 2 years|
|Annual Turnover||The borrower’s business should have a minimum annual turnover of ₹6 Lakh|
Documents required for Business Loan online application
|Business address proof||You are required to submit your utility bills/ rent agreement as business address proof|
|Financial documents||You are required to submit the bank account statement for the past 6 months|
As many non-banking financial companies (NBFCs) and lending institutions are offering online Business Loan applications, applying for these loans has become easier than before. You simply have to visit your chosen lender’s official website, fill out the online application form, submit soft copies of the supporting documents, and await verification and approval.
Post that, your funds will get disbursed into your account shortly. Using an online Business Loan EMI calculator will help you plan your monthly budget effectively so that you don’t miss out on monthly EMI payments.