Each business has unique financial needs and varying capital requirements. It may need additional monetary backing to meet short-term goals or working capital requirements for replenishment or purchase of inventory, equipment, expansion of office, or hiring additional staff.
However, small businesses may find it difficult to access requisite funds due to tight lending standards by financial institutions. In the absence of financing, covering regular expenses or pay for business growth becomes constrained. Even for a small business loan in India, business owners must necessarily meet the eligibility standards and other relevant criteria.
Eligibility and essential documents needed to avail a business loan
To get a small business loan in India applicant have to meet the following eligibility criteria –
- Age of the applicant to be between 25 – 55 years
- The business must have an operational vintage of at least three years
- The organization must have filed its Income Tax Return for at least the previous year
Apart from these parameters, a borrower should also have a strong credit profile and a good CIBIL score given that business credit report matter when applying for a business loan. Moreover, a good turnover ratio reflects positively on its profitability and growth.
Identity proof, address proof, financial documents and business ownership documents are essential to avail a business loan. Here are some of the documents that have to be submitted –
- Identity proof – Voter ID, Aadhaar card, PAN card, driving license, Passport or any other valid document that has been issued by the government
- Address proof – Ration card, electricity bill, telephone bill, trade license, lease agreement etc.
- Business ownership proof – Registration document in case of sole proprietors, municipal tax bill, Income Tax Returns, Bank Statement, GST Return, partnership agreement, memorandum of association, articles of association, etc. Documents on business owners depend on the nature of business.
- Financial documents – Copy of IT Return for minimum one year, profit and loss statement, balance sheet, Bank Account Statement for the last six months.
How to apply for a small business loan in India?
The application process for a small business loan involves the following steps –
- An applicant would have to fill-up the online application form of a business loan.
- After all the details have been duly filled in, the relevant documents would have to be submitted.
Once all the formalities are complete, and the applicant is verified, the loan amount is deposited in the borrower’s account within 24 hours.
Benefits of availing a business loan
Instant business loans pack a host of features that make funding for small business considerably easier –
- Affordable capital
Small businesses can avail of quick business loan up to Rs.20 lakh at a low rate of interest.
- Unsecured loans
These business loans are unsecured credits with easy to meet eligibility criteria and minimal documentation. In such a collateral-free business loan in India, business or personal assets do not have to be pledged in order to avail of financing.
- Flexi-loan facility
Borrowers have the option to withdraw only the amount required, and interest will be calculated only on the utilized amount. This is why a flexi loan is an ideal way to meet your working capital needs.
- Pre-approved offer
Reputed lenders such as Bajaj Finserv extend pre-approved offers to existing customers. These offers simplify the application process and help save time during application. These are extended on credits like a business loan to eligible applicants. You can check your pre-approved offer by entering basic details like name and contact number.
- Online access
Borrowers also have the convenience of online account access to check loan statements and other account details from any place at any time.
It is evident that getting an instant business loan has become quite convenient, and with the main advantage of having cash in hand to meet all the business expenditures. However, to make the most out of such a fund, borrowers should have a prior plan about its utility and repayment.