Business loans help small and big businesses grow and compete in their marketplaces by making it possible for them to expand or invest in new ventures. Sometimes, a firm desperately needs a business loan, in India to recover from a bad investment or a poor market condition. While funding is important for all businesses, start-ups and small companies can quickly succumb to financial constraints and collapse. It is for such firms that small business loans can be a literal lifesaver. If you own a small business and are in need of funds, here is a step-by-step guide to getting your business the financial succor it needs in the form of a loan.
Find your lender
Once you have verified that you conform to the eligibly criteria for getting a business loan, India the first step is to undertake a thorough search of all the lenders in the marketplace to find one that offers a loan matching your needs perfectly. There are enough players in the space to help you identify lenders most suited to your requirements so don’t give up easy. A good way to comparison shop is to make a simple table with the names of all the lenders and then jotting down, for each, all salient points about the loans offered. Some points to compare are, interest rate, loan amount offered, loan tenure flexibility, lender reputation, customer service and borrower reviews.
Verify your credit score and get data about your business’s financials ready
For small business loans, especially for new companies, the lenders may be as keen in your personal credit score as your business’s financials. Do a thorough check of both well in advance before you begin to apply for the loan. Ensure that an accurate picture of both is presented to the lender during application process. Keep in mind that a good personal credit can be as important as a good business record of repayments and profit history when it comes to small business loans.
Make your application
There is no longer a need to go physically to the lender’s office to apply for your loan and verify documents. Most lenders of repute have the entire process digitized so you can simply apply online and also get through most of the documentation online without ever stepping out of your office. When required, the lender may send across their own executive to carry out physical verifications of documents or your address.
Keep your documents ready when you are making the application. Typically, you will need:
- Identity proof
- Address proof (both can be given in the form of passport, driver’s license, Aadhar card, PAN card etc.)
(Your lender’s website will have a list of documents they accept as ID and address proof)
- Bank statements to show your financial health
- Business account bank statements
- Income tax returns filed for previous years
- Audited financial reports of your business for past 3 years or since inception if the business is new
Apart from this, the lender may require other documents too. Check beforehand if anything is required and arrange to have it at hand once you begin the loan application process. Having these ready to access ensures that there is no delay from your side in the loan application and verification process.
Typically, lenders will also ask you to submit a clear business plan outlining the strategy you have to take your firm ahead in the coming years. The clarity of ideas, the practicality of ideas and the sync with market conditions- these all tell the lender whether you have a viable business plan that is likely to succeed or not. A business plan that has a good success rate is a favourable sign for the lender that encourages him to sanction the loan.
Taking a business loan India may not be the simplest thing you have done for your business. However, it is one of the most valuable steps you may take to put your business on the track to growth and profitability. Keep these points in mind and they can make the loan application process simpler and quicker for you so you can get access to funds in the least possible time.
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