India is home to many aspiring entrepreneurs of small and medium-sized enterprises. It is an emerging market in the world at the moment. Small businesses are struggling to get a good market cap or make a presence with a smooth flow of funds. In India, small business loans are a must-have need for every entrepreneur as a shortage of funds is the only obstacle that budding entrepreneurs face in India. A business needs various considerations and investments at every step. Sectors like investment, marketing, technology, techniques, and working capital need a good flow of money. That is when a business loan plays a huge role and business owners need to maintain proper eligibility to get a loan. If you are one of them, you need to meet your eligibility criteria and get one. To get the best idea about a small business loan, you need to know everything.
What is a small business loan?
A business loan is a type of loan that is given to business owners by financial institutions. A small business loan is a small amount of money that is sanctioned for small businesses. There is no maximum borrowing limit and it is completely dependent upon the eligibility of the business and the owner. It is a one-time disbursement and usually goes on for a short tenure. A small business loan comes with a rate of interest and you need to pay a monthly EMI for repayment.
What are the documents for business loans?
PAN Card/Driving License/Passport/Voter’s ID/Aadhar Card
Address Proof Passport/Driving License/Voter’s ID/Aadhar Card/Utility Bill/Bank Statement/Bank Account Passbook (Updated and no more than 3 months old)
Ownership proof
Agreement Copy/Electricity Bill/Maintenance Bill with share certificate/Municipal tax bill/Share certificate
Shop and Establishment certificate/Tax registrations-VAT/Service tax/GST registrations
Eligibility for a business loan
The eligibility for a business loan is a rigid and strict one because of its unsecured nature. An unsecured loan is always very risky and the loan provider is very alert before offering approval. Things like credit score, income, revenue, cash reserve, cash flow, business stability, type of business, business plan, personal credit record and duration of business are taken into concern. Behind all the eligibility criteria, the main motive is to find out whether the borrower will be able to make the repayments or not. If you are planning to get a business loan, make sure you take these steps. Apply for a small business loan only when you are ready with all the eligibility.
Purpose of business loan
A business loan is flexible enough to meet any expenses that are related to the business. You can use the fund for infrastructure, working capital, workforce, technology, expansion, marketing and development. These sectors and anything that is related to business can be done. Make sure you borrow the money for a purpose, and use it for the sectors that need investment.
Where to get a business loan?
A business loan is very popular and almost every bank and financial institution offers a business loan. It is easy to get hold of a business loan from offline and online loan providers. There are banks, but the non-banking financial institutions are doing much better. The processing is quick and the rate of interest is also low as compared to banks.
Wrapping up
A business loan is a must-have solution to meet all business needs. Apply for a small business loan to manage the expenses according to your business expenses.
Read Here:Why should you apply for a small business loan?
