Business Loans are unsecured credit instruments that are offered to small business owners and entrepreneurs to achieve their financial goals with ease. As a business owner, you must understand the importance of having adequate funds to run your business. However, due to unforeseen circumstances, you might fall out of balance when it comes to your budget. In such a scenario, you can apply for a Business Loan to cover your unexpected expenses.
As these loans are collateral-free, you don’t have to look for collateral while applying for the loan. Due to the growing popularity of business finance, various lending institutions, banks, and non-banking financial companies (NBFCs) are offering Business Loans online at affordable interest rates. Besides this, the application process is online, making it easier for you to apply for these loans from the comfort of your home or office.
Use cases of a Business Loan:
- Infusing working capital
- Debt consolidation
- Procuring raw material
- Buying advanced machinery and equipment
- Hiring staff
- Expanding services and product portfolio
- Office Renovation
- Warehouse and storage
Before you apply for a Business Loan, you must consider some factors. Carefully research and compare lenders and see if they are levying any extra charges. Hidden charges can potentially increase your cost of borrowing.
Further, evaluate your requirement before you apply. The amount should be as per your requirement, not more or not less. In case you borrow an amount that is higher than you actually need, you might end up in a debt trap. Hence, carefully assess the number of funds you need and also consider overhead expenses.
Business Loan eligibility criteria
- Age- The minimum age for Business Loan applicants is 22 years and the maximum age is 65 years.
- Business vintage- minimum of 2 years.
- Annual turnover- The applicant’s business should have an annual turnover of at least ₹9 Lakh.
Documents required for Business Loan
- KYC documents:
- Lenders accept Company PAN card, Director/ Proprietor/ Partner PAN Card, Aadhaar card, and Passport as KYC documents.
- Director/ Proprietor/ Partner PAN Card, Aadhaar Card, Electricity bill, Rent agreement/ Passport
- Director/ all individuals/ Partners- PAN, officially valid documents, and proof of address
- Business registration proof + Business address proof (if not the same as business registration proof)
- Business address proof:
- Utility bills/ Rent agreement
Also Read: Applying for a Business Loan? Find a Complete List of Documents
- Financial documents:
- 6 months’ bank account statement
How to apply for a Business Loan?
The availability of online Business Loan applications has made it simpler to apply for business finance. Just follow these steps:
Step 1: Visit your lender’s official website.
Step 2: Go to the ‘Business Loans’ page.
Step 3: Click on ‘Apply Now’.
Step 4: Fill out the online application.
Step 5: Await verification and confirmation.
Using a Business Loan EMI calculator
Borrowing funds also means repayment of funds over a course of time. You are required to repay your loan amount in the form of Equated Monthly Instalments (EMIs). Missing out on EMI payments results in default and damages your credit history to a great extent, making it difficult for your to apply for any type of loan in the future.
Hence, it is important to have a fixed schedule and budget for your monthly EMI payments. In case you have multiple ongoing loans, there are chances that you might miss out on your payments. To avoid this, you can use an online Business Loan EMI calculator to determine your EMIs beforehand.
Also Read: Can You Get an Instant Personal Loan in Bangalore?
This will not only help you maintain your budget for extra expenses but will also help you create a monthly plan that will fit your EMIs in place. Online EMI calculators are widely available. You might even find one on your lender’s official website.
These tools are easy to use and give out an approximation of your monthly payments. All you have to do is enter your loan amount, loan tenure, and the interest rate offered to you. The tool will give out a calculated amount which is the approximation of your monthly EMI.
