A business loan is a loan that can be used for growing and expanding the business. These type of loans may be secured or unsecured. Several banks and financial institutions give out different types of business loans which are completely unsecured. These loans are like a personal loan in the sense the lender does not dictate where they should be used. Business loan in India is a popular way to fund business expansion.
Types of business loans:
• Equipment finance loans
• Line of credit
• Working capital loans
• Invoice discounting
• Short term loans
• Cash credit facility
Steps to apply for a business loan:
Step 1: Assess your fund requirement
The lender is going to require details about the fund requirement, which is why it is important to calculate this. Preparing a thorough fund estimate will help the lender assess the loan application faster which in turn will improve the business receive funds more quickly.
Step 2: Check business loan eligibility
While each lender has different loan eligibility, it is best to do thorough research and pick a few lenders whose eligibility criteria the business meets. This will help simplify the loan application.
Step 3: Fill out the loan application
You can apply for an online business loan or visit the branch of the lender. If you’re looking for speedy approvals for business loans, apply online through the lender’s website. Several lenders have quick online approvals and fund disbursements.
Step 4: Submit documents:
Once the lender approves the loan application, you need to submit the documents. Some of the documents required for a business loan application are:
• Identity proof of the applicant (Voter ID/PAN card/ Driving License/ Passport/ Aadhar card)
• Address proof (Aadhar card/ Voter ID/ Driving license/ Passport)
• Bank statement for the previous 6 months
• Income tax returns are showing the computation of income. Some lenders insist on Balance Sheet and Profit and Loss account as well. These financial statements should be audited or certified by a chartered accountant
• Proof of establishment (Business registration documents)
• Copy of partnership deed where applicable
• Memorandum and Articles of Association where applicable
Step 5: Completion of loan formalities
Once the loan is approved and the documents submitted, the loan agreement is signed. It is essential to go over the different terms and conditions outlined in the loan agreement before signing. This will ensure there are no issues in the future.
Types of business loans:
• Equipment finance loans
• Line of credit
• Working capital loans
• Invoice discounting
• Short term loans
• Cash credit facility
Steps to apply for a business loan:
Step 1: Assess your fund requirement
The lender is going to require details about the fund requirement, which is why it is important to calculate this. Preparing a thorough fund estimate will help the lender assess the loan application faster which in turn will improve the business receive funds more quickly.
Step 2: Check business loan eligibility
While each lender has different loan eligibility, it is best to do thorough research and pick a few lenders whose eligibility criteria the business meets. This will help simplify the loan application.
Step 3: Fill out the loan application
You can apply for an online business loan or visit the branch of the lender. If you’re looking for speedy approvals for business loans, apply online through the lender’s website. Several lenders have quick online approvals and fund disbursements.
Step 4: Submit documents:
Once the lender approves the loan application, you need to submit the documents. Some of the documents required for a business loan application are:
• Identity proof of the applicant (Voter ID/PAN card/ Driving License/ Passport/ Aadhar card)
• Address proof (Aadhar card/ Voter ID/ Driving license/ Passport)
• Bank statement for the previous 6 months
• Income tax returns are showing the computation of income. Some lenders insist on Balance Sheet and Profit and Loss account as well. These financial statements should be audited or certified by a chartered accountant
• Proof of establishment (Business registration documents)
• Copy of partnership deed where applicable
• Memorandum and Articles of Association where applicable
Step 5: Completion of loan formalities
Once the loan is approved and the documents submitted, the loan agreement is signed. It is essential to go over the different terms and conditions outlined in the loan agreement before signing. This will ensure there are no issues in the future.
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