Knowing your Business Loan requirements is the first and foremost step to availing of a loan instantly. Once you know all the Business Loan requirements, it is easier and simpler to adhere to all the ensuing steps. Also, to meet the equilibrium of demand and supply, a business constantly requires additional financial help from external sources such as a Business Loan. There are various lenders present in the market offering a Business Loan with attractive features and offers. Hence, you must match all the Business Loan requirements before applying for a loan. Once you know all the requirements, it is easier for a borrower to get a quick Business Loan. Below are a few of the requirements that you must match to avail of a Business Loan:
– Type of business
While you are applying for a Business Loan, you must understand what the requirement of the business is. Why do you need a Business Loan in the first place? The answer to these questions lies in the type of business that you are running. For example, if you have a small business, your Business Loan requirement will be different from other businesses, and you can opt for a Business Loan for SMEs (Small and Medium Enterprises). Similarly, there are other Business Loan requirements that can be met by several types of businesses.
– Credit history
Credit history tells you the overall financial history of the borrower which includes the type of credit, repayment history, any default, etc. Credit history is checked at the time of availing of a Business Loan to a borrower. You need to have a good credit history along with a good credit score to match the requirements of the loan. As a borrower, you must have a credit score of 750 and more to avail of a Business Loan. Higher credit scores ensure that you get a higher loan amount with a comparatively lesser rate of interest.
– Business Vintage
Business Vintage is referred to the number of years the business has been in the operation. A longer business vintage boosts the confidence of the lender to provide a higher loan amount with a lower interest rate. Generally, a minimum of one year or more of business vintage is required to avail of a Business Loan.
– Collateral
There are various lenders that offer a Business Loan without any collateral. Collateral free loan allows borrowers to avail of a loan without pledging asset any asset as security. If you match all the eligibility criteria such as age, business vintage, credit score, etc. there are high chances that you can get a loan without pledging any collateral. On the other hand, if you do not match the minimum required criteria, there are high chances that you have to provide collateral for availing of the desired loan amount.
– Profitability
Profit is the income generated by a business through selling goods and services to its customers. High profitability indicates that a business is doing good and can pay the dues on time. On the other hand, a business with less profit or a loss-making business has fewer chances of getting the desired loan amount. A lender will charge a higher rate of interest and will ask for collateral while providing a loan to the borrower.
– Documentation
Documentation is an important part of a loan application that allows the lender to confirm all the credentials related to a borrower. Below is the list of the documents that you can submit at the time of applying for a Business Loan:
- KYC (Know Your Customer) documents like the Aadhaar/PAN Card of the company and key person(s).
- Current address proof (Passport/Utility bills/Rent Agreement)
- Bank statements from the last 3 months
- Business registration proof and business address proof
– Type of Loan requirement
As aforementioned, there are distinct types of Business Loans offered by a lender to meet specific business financial requirements of a business. Business Loan for SMEs – focuses on the financial requirement of a small business, Business Loan for machinery is used to cater to any new machinery requirement or to upgrade or replace the existing machinery. Generally, Business Loan for machinery is used for upscaling the current goods and products or for purchasing new machinery. Business Loan for women is offered to promote entrepreneurship among women in India. Similarly, various other Business Loans are offered by the lender. You must apply for a specific Business Loan to avoid any rejections.
