Running a small or big organization involves numerous expenses and a constant need for external funding to continue operations without any interruption.
To meet these expenses, availing of financial products, such as a business loan in India, may not be a hassle for existing borrowers. However, young entrepreneurs must also possess a fair knowledge of acquiring such loan facilities.
There are different business loan categories in India, applicable for varied businesses and purposes. Here is a comprehensive discourse on the procedure of obtaining such a financing option.
Process of acquiring a business loan in India
Like every other form of credit, business loans involve certain rules, application procedures, and documentation. Since the proportion of finance is comparatively higher than personal advances, the procedure includes extensive documentation. However, this process could vary based on the lender one chooses.
Nonetheless, the following are some crucial points that applicants must remember to ensure a successful business loan application in India:
- Assess loan requirement
The foremost thing that loan applicants need to do is decide the exact credit requirement for their businesses and apply for the same. With the availability of various government-backed schemes and financial institutions extending substantial funds, it is easier to get tempted and go for the highest amount. However, over-borrowing will only burden one’s repayment structure, leading to defaults.
- Decide the type of loan
Lending institutions extend a range of business loans in India to financially assist the entrepreneurs in meeting necessary funding. These borrowing options include working capital loans, invoice financing, equipment financing, micro-loans, etc. Such loans do not require any collateral for raising funds. Individuals need to learn about each of these funding options and select the best one that meets their requirements.
- Draft an expenditure plan
Preparing a structured business plan will allow borrowers to utilise the acquired funds efficiently. It is also one of the essential factors that lenders consider before sanctioning funds for an organisation. To assess one’s affordability and repayment capacity, borrowers can use a business loan EMI calculator to determine the monthly instalments and overall interest outgo against a loan.
Learning about the EMIs beforehand will allow borrowers to structure their repayments accordingly and avoid financial burden throughout the loan tenor. Nonetheless, such a plan allows lenders to measure applicants’ repayment capacity by evaluating necessary business returns.
- Check eligibility
Most financial institutions consider certain factors when assessing business loan applications. These involve business vintage, annual turnover, etc. Applicants must ensure meeting these qualifying parameters and check repayment capacities. In this regard, one must also know how his/her credit report matters when applying for a business loan and act accordingly to avoid rejection of loan applications.
- Compare various lenders
Apart from other factors, repayment schemes, lending rates, loan amount, etc., differ across lenders. Therefore, it is always wise to compare different lenders in the market and their offered rates before deciding on the best deal.
- Arrange necessary documents
When approaching your preferred lender, borrowers need to learn about the essential documents to be submitted when applying for a business loan in India. Individuals must keep them handy in advance to ensure a seamless loan approval.
In this regard, acquiring a business loan from a leading financial institution like Bajaj Finserv will include minimal documentation and flexible eligibility parameters. Once these business loan eligibility and documents are verified, it takes only 24 hours to get the preferred loan amount transferred to the borrower’s account.
Here are some of the necessary business loan documents that applicants must provide:
- KYC documents
- Address proof
- Business ownership proof
- Other financial documents
Moreover, credible borrowers can also avail themselves of exclusive pre-approved offers extended by these reputed lending institutions. These offers are available on a range of secured and unsecured financial products. Moreover, by availing of these offers, borrowers can dodge the hassle of extensive documentation and save time. Therefore, borrowers can check their pre-approved offers by submitting their names and contact information.
How to apply for a business loan in India?
After learning about all the necessary information you need to apply for a business loan, follow the steps below to complete the online application process:
Step 1: Visit your preferred lender’s website and click on ‘apply online’ to open the application form
Step 2: Input your name and contact number to get the OTP
Step 3: Verify the OTP and submit necessary personal and business details
Step 4: Upload bank statements for the last 6 months
After submitting the online form, one of the lender’s representatives will contact you to discuss further steps.
To sum it up, apart from the application process, many more steps are involved when availing of a business loan in India, which borrowers must understand to reap maximum benefits. Staying updated about the loan charges, processing time, and other crucial aspects will allow borrowers to avail of the loan seamlessly.