A business loan application can have many stumped but it needn’t be like that. As a business owner, the ability to acquire loans as a source of fundraising is a critical aspect that propels growth as well as sustenance. In fact given the current economic climate, loan applications have been made easy enough as approvals also come rough sooner rather than later. This is provided everything is in place and the lender whether it is a bank or a non-banking financial institution is satisfied.
To make understanding this simpler we have broken down the process into 3 easy steps.
How to apply for a business loan in India:
The first thing that the applicant needs to determine is the eligibility. Even before you go ahead with the application in any shape or form it is important to research and assess whether your current business or the business proposition that you have in mind qualifies for a loan. Eligibility requirements might vary slightly for different lenders but for he most part the basic criterion remains standard for almost all. This includes
- Age limit (varies between 21 to 25 years minimum and 55 to 65 years maximum)
- Business that is already in existence should be profit making for the last two years
- A good credit score
- Proven records of cash flow in existence and a minimum annual income of Rs.150000 (this will also depend upon the amount of loan that is being applied for)
- Collaterals in place
In addition to this there might be some additional requirements that might be specific to the institution and their processes. These need to be considered at the research stage.
The second step in the process of how to apply for a business loan is to get all the documents ready. While some basic documentation remains the same through most institutions, again, there might be slight variable differences that apply from institution to institution. For e.g. non-banking lending institutions might not be so rigid about certain documents while banks might be. A basic list will include:
- Proof of identity
- Financial statements for the last couple of years including profit and loss statements, income tax returns, cash flow statements etc.
- Proof of Age (PAN Card)
- Business plan- the business plan is extremely critical for a new business when applying for a loan. The business plan needs to contain detailed information about the idea, the profitability model, the growth plan, the marketing strategy as well as numbers with regards to staff and assets purchase. For a business that is already in existence, the plan can include the vision for the next five years, what is it that the funds are required for and what is it that they will be used for.
Assemble all the paperwork and get your documents in optimal shape before moving on to next step.
With the basics taken care of, the next obvious move to locate a relevant lending institution. There are a few factors that come … Read More