Borrowing from friends or family often comes with emotional strings attached, which is where a business loan from a financial institution can be a game changer. A business loan empowers your innovative ideas, offering the financial backing you need, along with flexible repayment options and competitive interest rates—allowing you to focus on growth without the added emotional pressure.
If you are confused with the application process of a business loan and want to know whether your business qualifies for one then you have landed just at the right place. Keep reading as we discuss everything you need to know about business loans.
What is a Business Loan?
Simply put, a business loan is financial assistance provided to a business owner to help them meet requirements like expansion strategies, buying equipment, setting up a new factor, marketing etc.
A business loan is provided after carefully evaluating the business’s financial health and creditworthiness.
However, with a lender like Lendingkart, the evaluation process is minimal to enable companies of all sectors and levels to fulfil their vision.
Business Loan Application: Everything You Need to Know
Applying for a business loan is a crucial strategic move for your business making it important that you are prepared with the necessary documents to meet the eligibility requirement:
Eligibility Criteria:
● For Private Limited or Limited Companies
If you need a business loan for up to an amount of ₹15 lakhs then your business must have a net annual income of more than ₹1.5 lakhs. For a loan for any amount beyond ₹15 lakhs, net yearly income should be more than ₹3 lakhs.
- For Proprietorship or Limited Liability Partnership
You will have to provide a statement of profit and loss as a minimum criteria requirement.
- For Self-Employed Professionals
If your business comes under this category, then relevant documents to prove your qualifications are needed.
Remember: Any person applying for a business loan must be between the age of 21 years and 65 years.
Documents Required:
- Photo ID proof and passport-sized photographs.
- Identify proof: Any document issued by the government like an Aadhaar card, Voter ID, or Passport.
- Bank statements from the past 6 months.
- Income tax returns and profit and loss statements for the past 2 years.
- Sales tax certificate, trade licence and ownership documents.
- Balance sheets, of previous years (audited by a registered chartered accountant).
Application Process:
If you are meeting the eligibility criteria and have all the documents ready, here’s how you can easily apply for a business loan:
- Step 1: Online Application
Visit the official website of the lender and fill out an online application form with personal and business details.
- Step 2: Document Upload
Upload all the documents required. Take reference from the above-mentioned list of documents.
- Step 3: Application Verification
Wait for the lender to verify your application and documents.
- Step 4: Approval and Disbursal
Once the verification is done and your application meets the eligibility criteria, your loan gets approved and disbursed.
Read also: Top Industries for Business Opportunities in the UAE: Which Sector Should You Enter?
Business Loans: Tips to Get You Started
Meeting the eligibility criteria for a business loan might sound daunting but Keeping these points in mind can help you easily qualify for a desired business loan:
- Credit Score: Remember that a solid credit score demonstrates your creditworthiness and is a key factor that the lender evaluates before approving your loan application.
- Business Cash Flow: The primary factor for a lender is to ensure that the borrower has a promising repayment capability and for this, the lender relies on analysing the business’s cash flow.
- Business Performance: Make sure that you have updated business documents to showcase profit and loss. Additionally, the stability and profitability of your business play a major role in the approval process.
- Business Loan Type: Know the type of business loan your business needs. For instance a working capital loan, short-term loan, equipment loan, line of credit loan etc.
Pro Tip: Utilise a business loan EMI calculator to understand the repayment amount better.
Summing Up
A business loan app has been designed for a seamless experience. To qualify for a business loan with a financial institution like Lendingkart, you are not required to fulfil a long list of criteria. Additionally, with no collateral options and flexible tenure, getting a business loan sanctioned is a straightforward and hassle-free step that can add wings to all your expansion and marketing ideas.
