How do you qualify for a business loan?

India ranks third in terms of start-ups and enterprises. There is a huge number of small and budding businesses all over the country. The only obstacle that these businesses face is that of insufficient funds. The requirement for funds is necessary and one needs to meet the growth and business expenses. There are various areas in a business that need funding and investment. To have a market presence, your business needs to stand in terms of infrastructure, marketing, technology, and workforce. A business loan is helpful for getting instant funds for your business expenses. You can easily get a business loan with the help of the right eligibility criteria. Eligibility has various factors and you need to meet them all for a low business loan interest rate. For start-ups, it becomes more important because there is less exposure to the market and low revenue to convince the financial institutions.

Documentation for business loans

●    PAN Card/Driving License/Passport/Voter’s ID/Aadhar Card

● Passport/Driving License/Voter’s ID/Aadhar Card/Utility Bill/Bank Statement/Bank Account Passbook

●     All documents have been updated in the last 3 months.

●     Proof: Ration Card/Telephone Bill/Electricity Bill/Passport/Trade license/Lease agreement/Sales Tax certificate. Income Proof: Bank Statement of the Last 2 Years.

●     Last 2 years ITR along with computation of balance sheet, income & profit & loss a/c for the last 2 yrs.

●       Proof of Business Continuation

● Mandatory Documents such as Sole Proprietorship Declaration, Certified true copy of Memorandum & Articles of Association


Eligibility for a business loan

●     A good business plan: A well-drafted business plan makes way for approval. You can easily get a business loan based on your plan. Build it meticulously so that you can get the right amount of loan. Stress about small and big details of your business and keep the focus on generating revenue. Keep an outline index so that it is interesting and you get a low business loan interest rate.

●   Business credit score: A business credit score works for a business loan. However, if your business is very new and does not have a lot of credit history, use your personal credit score. Business owners need to offer their credit score.

●     Cash flow and cash reserve: Show the financial institutions the cash flow statement and also the cash reserve at the time of contingency. This will speak about financial stability in business and you will get approval.

Finishing up

Keep the business loan interest rate low with good eligibility criteria. Have all your documents right and meet the criteria to get an amazing business loan interest rate.

Must Read: How is interest calculated on a business loan?

 

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