A report suggests that India became home to around 50,000 new start-ups in the year 2019 due to the easy availability of financial assistance. The availability of the likes of collateral-free business loans only made it easier to expand and grow business. With some financial institutions, availing such credit of up to Rs.20 lakh is now more convenient than ever.
Businesses need funding to cover diverse expenses, like investing in larger premises, upgrading the latest equipment and optimising their operations. Simultaneously, convenient access to financing options like personal loans for self-employed can fulfil both business and personal funding needs. However, there are specific things that you should be aware of while opting for such business finance.
Things to take care of before availing a small business loan –
1. Interest rate applicable
Interest rates on business loans can vary depending on the lender selected. It is thus crucial to go for a lender comparison to arrive at the most affordable rate of interest. Also, applicants can utilise their eligibility to negotiate for a lower rate of interest.
Availing a loan at nominal interest rate keeps the EMIs payable in check, thus becoming one of the effective ways of cost reduction without impacting business growth.
2. The eligibility criteria to avail such loan
Applicants need to fulfil specific eligibility requirements to avail a business loan. Such parameters can defer from one lender to another. While meeting all the requirements improves one’s chances of quick loan approval, failing on any one of these brings a chance of rejection.
Following are the standard eligibility requirements laid down by financial institutions for advances like personal loans for self-employed.
a) Applicants must own a business with a vintage of at least three years or more.
b) He/she should be within the age limit of 25 to 55 years.
c) They should have their IT returns filed for at least the previous financial year.
d) He/she should possess strong credibility with a high CIBIL score of 750 or above.
3. Documents required
Individuals should be aware of the list of documents necessary to avail the business credit with minimum hassle. They include –
● KYC documents for identification purposes, such as Aadhaar card, Voter ID card and PAN card.
● The Balance Sheet and Profit and Loss statement for the past two years, audited by a CA. Also, they need to provide bank statements for the past six months.
● Documents related to proofs of business existence like the certificate of commencement.
4. Loan approval and disbursal process
The swiftness of a business loan approval and disbursal primarily depends on the financial institution. Usually, trusted lenders provide online loan processing to enable immediate approval of the advance and disbursal. Lenders like Bajaj Finserv provide one of the fastest business funding through disbursal within one working day of approval.
They also provide pre-approved offers to make the process of financing hassle-free and quick. These offers are applicable to several financial products, including business loans and personal loans. You can check your pre-approved offer by entering only your contact details.
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5. The loan application process
Before one decides to borrow funds, they should be ready with a checklist for their loan application. Although the business loan application process is simple, applicants should be ready with primary loan requisites like documents and business certificates, etc.
Start with selecting a suitable lending institution for the advance and proceed to fill up the application form available online on their official website.
The next step requires the submission of all relevant documents and certificates related to business. After all the details are verified, applicants can receive approval for the business loan from their lender.
6. Repayment flexibility
Flexibility in repayment options is one of the primary concerns that define borrower convenience in loan management. With the best lenders, borrowers can choose to repay the advance over a flexible tenor extending up to 60 months. Also, they can opt to part-prepay or foreclose the loan account at nominal charges.
7. Accessibility of loan account online
Online access to the loan account allows individuals to keep an easy track of their loan status, EMI due dates, loan outstanding and such other details. Considering the availability of such a facility can thus be one of the crucial factors to look for when availing the advance.
Other than these parameters, individuals should also check other applicable charges on the advance. Detailed information regarding all these factors allows an individual to avail a business loan that comes with the best features at affordable rates. You can Check Clopton Capital to avail a quick business loan.
