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Things To Check While Availing Business Loan For Your Venture

Things To Check While Availing Business Loan For Your Venture
Things To Check While Availing Business Loan For Your Venture
Businesses require additional investments to expand their operations and bring in more profit. It also involves hiring skilled and experienced employees, purchasing new equipment, updating inventory, investing in infrastructure or moving to a new location. Some business owners may require access to more working capital as well.

Businesses can conveniently obtain additional funding to implement the above measures by opting for business loans provided by several reputed financial institutions.
However, companies need to do a cost-benefit analysis as well before availing credit to measure its effectiveness.

As most financial institutions in India provide business loans, an individual should compare the features and benefits offered by them before opting for the credit as well.

Here Are The Things One Should Check Before Availing A Business Loan:

● Eligibility Criteria: Before opting for a loan, borrowers should check the eligibility criteria for the advance as set by the lending institution. Since the eligibility criteria vary from lender to lender, one should look for a lending institution that provides easy to meet eligibility criteria for easy loan processing. The basic eligibility criteria laid down by lenders include:

a. Age of the applicant should be within 25-55 years.
b. They should own a business that is operating for a minimum of three years.
c. Borrowers should also hold a minimum credit score of 750.

● Documentation: Besides eligibility criteria, applicants should also go through the list of documents required and keep them handy during the business loan application process. The necessary documents include:

a. Business Ownership Proof: Business registration documents, partnership agreement, certificate of commencement, Article and Memorandum of Association, etc.
b. Income Proof: Income Tax Returns filed for the previous year, Balance Sheet and Profit & Loss Statement, bank account statements, GST return, etc.
c. KYC Documents: PAN card, voter ID, Aadhaar card, passport, driving licence or any other official document.

Apart from the above documents, borrowers may need to furnish other loan related documents as asked by the lending institution.

● Application Process: Borrowers should also opt for a financial institution that has a simple application process which can be completed online. It will enable them to save valuable time. Additionally, offers like pre-approved offer make for an efficient credit application process.
Besides business loans, these offers can be availed on other unsecured advances like personal loans, credit cards and the likes. Borrowers can check their pre-approved offer by entering minimum details which include their name and contact information.

● Interest Rates: Applicants should also check for a lending institution that offers substantial funding at affordable business loan interest rates. Borrowers can also consider opting for business loans without collateral, which can be availed quickly without mortgaging any personal or business assets.

● Additional Benefits: One should look for financial institutions that offer additional benefits to applicants such as Flexi Loan facility, online customer account, etc. With features like Flexi Loan facility, business owners can withdraw only the required amount from a pre-sanctioned loan. One also has to pay interest only on the amount withdrawn. This facility is beneficial for business owners who need frequent credit to meet their working capital requirements while containing interest accrual.

Before availing the advance, you should also know how to determine how much working capital your business need. Moreover, features like online account will enable borrowers to access their account easily and keep track of all business loan-related activities.

Before applying for a business loan, one should prepare well to improve their eligibility for a business loan and enable them to repay the loan quickly. Consequently, one should try to take steps that improve their CIBIL score for boosted eligibility.

Individuals should also know why their business credit report matter when applying for a business loan.

Furthermore, apply for a specialised business loan with features that are more suited to your business needs.

For instance, if you require working capital, then go for a working capital loan and if you want to upgrade your machinery, opt for a machinery loan. Manage your business advance properly and pay EMIs in time to maintain creditworthiness.

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