A business loan becomes necessary when you want your business to run smoothly without any interruptions. The loan gives you the required funds to expand your business, meet its production demand and also for the everyday operations. Banks and non-banking financial companies offer attractive and varied business loans for every need of the business. If you are also looking for a business loan, here are five simple steps to avail a business loan without any difficulties –
1. Find out the quantum required
The first step in availing a business loan is to find out the financial requirements of your business. When you know the exact amount of loan required, you can search for lenders allowing you the amount. Be careful when deciding on the loan quantum. An unnecessarily high amount would increase the repayment burden and a low amount would not fulfil the financial requirement. So, carefully work out the exact amount of funds which would be required by the business.
2. Select the right type of loan
As mentioned earlier, business loans come in many variants. There are term loans, loan against property, working capital loan, equipment finance, invoice discounting, etc. Find out the need of funds and then choose the correct loan which is designed for financing the required need.
3. Find the best lender
When it comes to business loans, there is no shortage of lenders offering such loans. You would find banks and financial institutions having a varied bouquet of business loans. After you have calculated the loan amount and the type of loan required, find the perfect lender for the loan. To do so you should compare the different lenders offering the required loan. Compare lenders on the basis of the interest they charge and other relevant fees charged on the loan. Comparison of different lenders can be done easily online through the websites of online loan aggregators. These aggregators are tied-up with all leading lenders and show you the interest of different lenders helping you select the best.
4. Check if you meet the eligibility criteria of the loan
Once you are through with steps 1 to 3 and have selected the lender, it is time for you to check whether you qualify on the eligibility parameters of the selected loan. In terms of eligibility, business loans require the following common criteria –
• Age of the borrower should be between 21 years and 65 years
• The business should be in existence for at least 3 or 5 years depending on the nature of your business
• The annual turnover of the business should be at least INR 1 crore
• The credit score should be at least 650
• You, as the borrower, should have a self-owned home or business property
• You should also have a banking stability of at least 6 months
If you meet these eligibility criteria, you can avail the loan you have selected.
5. Submit all the relevant documents
The last step in availing a business loan easily is to submit the documents required for processing and sanctioning the loan. Important documents include the identity proof, address proof, income proof, etc.
If you follow these five steps, you would be able to get a business loan easily without any problems.