If you are a self-employed professional or an entrepreneur of a small business, you must have faced situations when you may have required extra funds to operate, right? Yes, be it a small or a big business, you can face some urgent situations when you may have to dig into your savings and use it for your business.
Not anymore, as you can always grab small business finance in the form of a business loan. Since business loans are unsecured, you can grab them instantly and up to the tune of Rs.30 lakh.
However, before you go ahead and apply for a loan for business, you should ensure that you are well prepared for getting loan approval.
In the same context, let’s provide you a quick guide that will help you get closer to small business finance. Let’s know more!
Feeling a need for money for your business need is only the first step, you should also decide how getting a business loan will help your business! Your potential lenders may ask you this too. Thus, be prepared to know what the loan money you will use for! You can use a loan for business to manage daily cash flows, rent or purchase a new premise, purchase new equipment, hiring a team and more. You can also apply for a business loan if you urgently need some money to inject in your business to give it a new lease of life.
Not deciding how much will be too much while applying for small business finance may not help you cover your business needs in the long run. Yes, apply for a lower amount will again not help you as you may feel that you may need more money. At the same time, applying for a higher amount than needed may let lenders question your credibility. Hence, be sure how much will be enough before applying.
Did you know that lenders love to award a small business loan to such business owners who have a business plan ready for its growth and expansion? Why? It’s because it presents the case of such owners confidently that they are on the right track to take their businesses to the next level. Hence, lenders feel convinced that such people will easily repay the loan and approve the loan request. Thus, present a business plan to your lender while applying for it and get speedy loan approval.
Unless you don’t fulfil the business loan requirements, you won’t get the loan. Thus, get into the details of knowing the eligibility terms of your potential lender to be loan confident. Also, ensure that you have a healthy CIBIL Score to prove your creditworthiness and a score above 750+ will be good to hand you the loan.
Unless a lender is not confident that a business’ financial health and ability, it may not approve your loan request. Thus, before applying for a quick business loan, ensure that you have all the latest financial documents ready. Ensure that you have ITR (Income tax returns), Form 16, balance sheet, recent bank account statements, and profit and loss statements. It would also be good to get a recognized Chartered Accountant (CA) on board to audit last year’s turnover of your company and submit the details.
These are some of the standard business loan eligibility conditions demanded by a lender while processing your small business loan application such as:
You should be a citizen of India
Your business must have a vintage of 3 years
You should have filed your firm’s last 1 year of ITR
It’s mandatory to audit the turnover of your company by a CA
You are now well-versed and aware of the aspects to consider before applying for a loan for business so that you get quick approval. Business loans are available online these days, and you can apply for it confidently if you are looking for it!