One fine afternoon, Mr. Singh had an idea to utilise the garage portion of his house as an operational garage. It occurred to him that it was best to make use of the open space for an income-generating business. This idea was encouraged by his family as well. In about a year, the clientele of his garage increased substantially, so it became necessary for him to install specialised machines and also improve the manpower.
To facilitate this requirement, he required a large sum of money. The best possible alternative to fund the costs other than self-financing was to get a business loan. Since self-financing would mean shelling out a large sum of money from his own pocket, only a business loan seemed a feasible option.
The below features of a business loan seemed the most attractive to Mr. Singh. They are as follows-
- Ease of payment: Business loans offer a great deal of ease of payment. The borrower is offered the flexibility to customize their business loan based on their specific business objectives, with a repayment schedule that provides ease of functioning. This feature is a great benefit as borrowers can analyse their business needs well before applying for business loans and customise their plan and tenure.
- Security not mandatory: One of the biggest factors that hinder borrowers’ chances of applying for a business loan is the requirement of collateral security. However, when applying for a business loan, collateral is not mandatory and there is absolutely no obligation.
- Quick access to funds: Fund deployment happens quickly as the overall process of application is smooth. This helps the borrowers to fulfil their requirements.
Business loan Eligibility
The applicant needs to fulfil the below criteria to be eligible for a business loan-
- The age should be between 25 and 65 years.
- The CIBIL score of the candidate must be equal to 700 or more.
- The business of the applicant should have report profit for at least 3 consecutive financial years.
- The turnover of the business must reflect an upward trend.
- The financial statements should have been audited by a registered practicing Chartered Accountant.
So to deep dive into how an individual can apply for a business loan, read on and follow the below steps-
- The loan application can be filled out online in a matter of a few minutes, the applicant needs to fill out the application form. Along with the application form, the lender requires documents to verify credit-worthiness.
- The lender may need the following documents to verify the application-
- Previous 6 months’ bank statements.
- Income Tax returns of last 2 years.
- Financial Statements of last 2 years.
- KYC documents of company and business owners.
- A report stating how the loan amount is planned to be utilised.
- ID proof of applicant.
- Once the form and documents are verified, the lender grants approval, and funds are directly dispersed to the borrower’s linked bank account.
- The other modes of application for a business loan are phone, email, virtual assistant, and offline application. To save time and effort, an online method is the most utilized option.
- The business loan interest rates are around 19% and the loan amount can be between Rs. 5 lakhs to Rs. 75 lakhs with tenure within the range of 12 to 36 months.
Hence, the applicant must meet the business loan eligibility to initiate the further process of application. The business loan EMI calculator is a tool that helps the applicant to analyze the EMI cost to be borne by them. The EMI cost will comprise the principal as well as the interest component for the overall loan tenure. The business loan EMI calculator is available online and free of cost, which produces the results instantly. The advantage of a business loan EMI calculator is that it helps the owner to design a monthly budget and stick to it to manage business expenses.
The above factors have made it quite convenient to apply for a business loan which has enabled borrowers like Mr. Singh to make their dreams a reality!