The easiest way to acquire a business loan
Banks can provide business loans easily to borrowers who have an excellent track record of credit history. Banks are in genuine need of customers who want to opt for loans, but the major hurdle in loans is the recovery of the loans. If the bank does not have confidence in the borrower’s repayment capacity, banks may straight away reject the loans of the borrower. , the customers, thus having a good credit score and running a profitable business, are amongst the preferred customers of the bank. Banks have maximum bad debts of loans in case of business loans. Even the loans extended to large organizations having a profitable business have turned into bad debts. Thus the banks are very cautious about extending the loans to the borrowers for business purposes. Thus the balance sheet of the business should be clear while applying for the loans. The running businesses should also have copies of profit & loss statements, GST filing, and income tax returns. The government of India has taken a major initiative in case of the disbursement of the loans to help the MSME grow their business & increase the employment opportunities for the people.
Also, startup companies play a major role in the development of the country. There have been multiple numbers of startups that have come up in India, which provide plenty of opportunities to the youths. And mostly many of the startups are started by the youths & for the youths. Startups are the major potential clients of the banks to whom banks can extend the loans. The startup loans can be extended to only those startups that have a concrete plan for the business. Also, the bank officials should have confidence in the business proposal; only then can the banks extend the loans to the applicants. Also, the entity should be a registered one and should be running into business. The recovery of the business loans is very difficult; thus, the banks are cautious about extending the loans. The typical interest rates charged for business loans are 11%- 24% per annum. Different lenders charge different interest rates to the borrowers. The startups can utilize the funds raised for buying the assets in the office, paying wages to the employees, buying a new office space, or else for the expansion of business. Thus for the startups to raise funds opting for business loans is a good idea as all startups cannot raise funds through investor funding.
Following are the steps to acquire business loans in India:
- Fill up the required form for the approval of loans from the lender. Attach passport-size photographs along with the form.
- Submit the Xerox copies of the documents along with self-attested ones.
- Read the terms & conditions of the documents before proceeding with the loans.
- After submitting the form & documents, the banks will verify the credentials of the borrower & also the credit score of the applicant and then process the applicant’s loans.
Easy steps for getting the loans approved:
- Have a concrete business plan:
The borrower should have a concrete plan for the business before applying for the loans. The applicant should be able to explain the plan of business through which the bank officials should be able to get convinced with the business plan.
- Maintain proper credit score:
An individual’s credit score plays an important role in the approval of the applicant’s loans. The maximum bad debts of the bank get converted into business loans; thus, banks should be extra cautious about the extension of the loans to the applicants. Therefore having a good credit score is important.
- Maintain a proper balance sheet of the business:
The profit & loss statement should be available with the applicant, GST filings, and the ITR returns statement. The borrower should also not be a defaulter of taxes and should disclose the business turnover’s proper income. The business should be run ethically & legally is the foremost important criteria for getting the loans approved.
The banks are extremely cautious in case of business loans that should not get converted into bad debt, as in that case, the recovery of the loans also becomes difficult. Thus acquiring a business loan without a mortgage is difficult. But individuals with a clear track record of credit history are given preference for the approval of loans. Thus the business persons with clear track records are given the highest preference for the approval of loans.