Business Loan Eligibility and Documents
Business loans are a perfect way to get the extra flow of cash into the business. This cash can be used as working capital, to purchase inventory, to meet everyday expenses or for marketing purpose. Many banks and financial institutions offer business loans without any collateral. Such unsecured business loans are great for start-ups. However, one can also opt for secured business loans wherein any property, machinery etc can be kept as security. Business loans are better than personal loans as one gets access to a larger amount, better interest rates and fixed tenure.
How to get a business loan?
Like any other loan, one needs to apply for the business loan with the banks by duly filling the application form and attaching the requisite personal and financial documents either online or by visiting the bank. Offline mode is more cumbersome and time-consuming. Online application of business loan is more convenient. Fintech enablers like LoansJagat offer an excellent platform for applying for a business loan without any collateral wherein the applicant can make a comparison among the eminent banks and NBFCs which are associated with it for the loan interest rates, EMI calculator, loan tenure, terms and conditions and business loan eligibility criteria.
LoansJagat online platform is extremely user-friendly. The first step is to fill the basic KYC and financial details. You will be presented a list of banks offering the business loans with their interest rates, terms and other additional charges. After comparing, choose the bank with the best offer. LoansJagat will work to process your loan request to the chosen bank. A dedicated relationship manager will manage and keep a track of your loan processing request. It is the most convenient, quick, paperless and seamless way of acquiring a business loan.
Business Loan Eligibility
The business loan eligibility criteria differ from bank to bank. Banks undertake some of the factors into consideration. These are:
- Eligibility: Business loans can be availed by self-employed, non-professionals, Sole Proprietors, Partnership Firms, Private Limited Companies, Public Limited Companies involved in the business of manufacturing, traders etc. Self-employed professionals like doctors, CA, CS, Architects etc are also eligible for availing a business loan.
- Age: The business loan applicant must be in the age group of 21 to 65 years.
- Loan amount: Business loans ranging from Rs. 50000 to Rs. 100 crore is available via the LoansJagat platform. The higher the loan amount, the lower the rate of interest will be charged.
- Interest Rate: The interest rate differs as per the lender have chosen for your Business Loan and usually varies from 14.50 % - 24.00%.
- Loan Tenure: Business loans are unsecured loans are thus given for shorter time period varying from 1 year to up to 5 years.
- Age of Business: Being unsecured in nature, business loans always have risk involved for lenders. That is why many banks and NBFCs consider the age and growth of the business as an assurance that the business is authentic, stable and can generate enough profits to repay the debt. Lenders prefer a business age of 5 years and a growth rate of 10-15% in sales or turnover for the last 3 years.
- Annual Turnover: Banks are more than happy to offer the business loan to companies with an annual sale of Rs. 1 Crore and above. However, business loans for lesser annual turnover are also available.
- Income Tax Returns (ITR): ITR is the reflection of your income and repayment capacity. Banks approve business loans of applicants who have duly filed ITRs of past years.
- Banking Stability: Banks also checks your operational banking account for stability and repayment capacity on account of your average account balance by seeing the bank statements of the past 6 months. The outbound and inbound cheque bounce status are also considered by banks to know your credit history.
- Credit score: 650 and above is considered good for business loan eligibility.
Documents required for Business Loan
- Signed Application Form
- Identity Proof (PAN)
- Residential Address Proof
- Last 3 years ITR (self and business), profit and loss account, balance sheets certified/audited by a CA.
- Last 12 months bank account statement (self and business)
- Certificate and Proof of Business Existence
- Business Profile
- Office address - ownership/ lease / rent agreement/ utility bill