A Business Loan is offered to business owners with a running company but requires external funds for operations. The investment covers expenditures such as employee salaries, rent, buying equipment, or expanding the business to other cities.
Repayment is also a factor in the definition of a Business Loan, as the lenders charge interest on the principal amount the borrower should repay in full within the Loan period.
Eligibility criteria for Business Loans
The Business Loan details must fulfil the eligibility criteria:
- Established enterprises and businesses running for more than six months at the time of application.
- A minimum turnover of Rs. 90,000 is mandatory within the last three months of application.
- Make sure the business does not fall under any category or list of blacklisted or excluded Businesses.
- The office or business location should not be on the negative or blacklisted location list
- NGOs, Charitable organisations, and trusts are not eligible for a Business Loan.
Documents required for Business Loan
Here are the documents companies must submit to fulfil the application for a Business Loan:
- KYC documents: Identity and address proof of the borrower and all co-borrowers
- The borrower's PAN Card and of all partners
- Last six to 12 months' bank statement of the main business account
- Signed copy of standard terms Loan facility
- Additional documents for processing Loan requests and credit assessment
- GST registration
- The borrower's previous 12 months' bank statements
- Proof of the Business registration
- Aadhaar copy and PAN Card
- Deed copy and company's PAN Card copy in case of partnerships
Applying for a Business Loan
Applying for a Business Loan requires several key steps to meet lender requirements. Here is a concise guide:
Determine your needs
To apply for Business Loan, start by defining how much money you need and how it will be used. A clear purpose will guide the application process and demonstrate your business’s needs to potential lenders.
Assess your financial health
Review your business's financial statements, including balance sheets, income, and cash flow statements. Lenders will evaluate your credit history, so ensure your credit report is accurate and resolve any issues beforehand.
Choose the correct lender
Research various lending options, such as traditional banks, credit unions, or online lenders. Each offers different terms, interest rates, and requirements. Compare these options to find the best fit for your business.
Prepare your documents
Gather essential documents, including your business plan, financial statements, tax returns, and any legal documents related to your business.
Submit the application
Ensure all required documents are attached, double-check for errors or missing information, and submit them.
Conclusion
Applying for a Business Loan is a simple and helpful process for small Business owners and enterprises.
