How to Apply for Business Loans in India? Detailed Guide.

apply for business loans
Business Loans

Business loans act as a boon for both budding entrepreneurs and established businesses. It provides a hood of financial support and courage to invest in ideas.  Business loans are of many types. You can avail it either to start a new business or for developing the existing business. While starting a new business necessitates taking into consideration, especially if you are looking to apply for a business loan online.

One can make a plea for unsecured Small business loans or secured substantial business loans. Small business loans designed for the entrepreneurs having businesses of low volume. Whereas, substantial business loans are suitable for companies that operate in large scale. Depending on your business structure you can opt either secured loan or unsecured loan. Let us have a detailed look at the different types of loan and ways to apply for them.

Who can apply for a business loan?

Any person who runs a business adhering to all legal and statutory requirements is eligible to apply for a business loan.
People who desire to become entrepreneurs can also apply for Business Loans and may get the same approved if they meet all the criterion that banks require

The process involved in getting a Business Loan:

Apply for business loans
Process for getting a Business Loan

An existing entrepreneur or any person who wants to start a business approaches the bank he chooses to get a business loan from with all the documentation requirements of the bank.

  • Banks check for the authenticity of the business run by the applicant.
  • After the authentication process is over, discussion happens between the concerned Bank and the person applying for the loan about the possible loan amount, the tenure of the loan and interest rates.
  • Once an agreement settles between both the parties, the required paper formalities are carried out by both sides.
  • Once the loan gets approved by the Bank, the applicant is informed about the same and fund released to him in the mutually agreed manner.

General requirements by banks to offer a Business Loan:

Many banks provide business loans whose criteria and terms and conditions to obtain a loan differs from each other.

In general, some crucial points are considered by the bank for assessing the credibility of the business, and the individual who applies for the loan:

  • Business type.
  • Financial track record of the business.
  • Possible or existing cash flow from the business.
  • Turnover or breakeven point of the business.
  • Profitability of the business (intended to be carried out, in the case of new business venture)
    Business type (Private, Public, Partnership and Proprietorship).

How much is usually the loan eligibility?

Apply for business loans
Apply for business loans

Every person who applies for a business loan possesses different levels of business loans eligibility. This limit is purely at the discretion of the bank, and no applicant can claim it as his right.

Some factors that act as basics for obtaining a loan:

  • The total number of years that a business has been in operation.
  • The profitability of the business over the years since the date of inception.
  • Cash Flow generation exhibited by the business during the years of operation.
  • Revenue generation capability of the business over the years since the date of inception.
  • Is the project viable in case of a new business venture?
  • The scope for business in the future with the changing market scenario, in case of existing business.
  • Repayment capacity of the borrower. In case the business is dull and earning low revenues due to various internal and external factors capable of affecting the business.
  • The overall assets and liabilities that belong to the business to compensate any break in repayment to the Bank.
  • The income and expenditure ratio of the business to assess the monthly repayment capacity of the businessman in the form of EMI’S.

Business loans made easy with the development of technology

Obtaining a business loan is not as cumbersome as it was in the earlier days. Banks have come out with novel ideas based on the current standards. Many banks, as a part of their customer service policy process small business loans in a quick manner.

Thanks to the advancement in technologies. Applying for small business loans online is possible nowadays. There are many websites which provide information on banks that offer best business loans. Some even provide details about banks that offer bad credit business loans. Try to understand about no credit business loans through reliable sources. Avail easy small business loans and quick business loans offered by many banks to make your business march towards success.

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