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A Quick Guide to Getting a Business Loan
Posted on Wednesday, May 25th, 2022 | By IndusInd Bank
For any business, access to finance is a crucial element for success. Whether you are looking to expand your business operations, purchase new equipment, or fund working capital, you need to raise the funds required to accomplish these goals. This is where business loans come in.
Using a business loan, you can fund your requirement in just a few easy steps. Applying for a business loan has never been easier. Today the application process is completely online and can be filled out in minutes given you have the right guidance.
So, if you are looking to apply for a business loan, here are the steps that you would need to follow:
Figure out your business requirement
The first step in applying for a business loan is to figure out which kind of business loan you wish to apply for depending on your requirement. Some of the business requirements could be:
- Working capital loan
- Business expansion
- Loan for capital expenditure, etc.
Here, you should keep in mind that different kinds of loans might have different interest rates and tenures. Secured loans that are backed by some asset such as loans for equipment will usually carry a lower interest rate. Unsecured loans will have a higher interest rate since they are riskier for your lender.
Check your eligibility
To be eligible for a business loan, lenders usually look at the following factors:
Credit score
This is probably the first thing that any lender will check before judging your eligibility. Therefore, maintaining a good credit score is very important. Generally, a CIBIL score of 750 and above is what you should be looking at. Having said that, even if you don’t have a good credit score, that doesn’t necessarily rule out your eligibility. It will, however, have some impact on the terms of your loan.
How long have been in business
This is again a very important parameter that a lender will look at. The longer you have been in business, the better it is since this gives out the impression that your business is stable.
Cash flow
This one is the most important aspect of you being eligible for a business. Your business needs to be generating enough cash flow such that you are able to pay back the loan on time.
How to apply?
Today, you can apply for a business loan completely online. Most lenders have an application form that is to be filled out and submitted along with the below-mentioned documents:
- Identity proofs
- Company PAN card
- Bank statements of the firm
- Certificate of incorporation
- Past 3 years audited financials
Please note that this is not an exhaustive list and the actual documents required will differ from lender to lender.
Last words
Today, there are ample options to secure financing for your business. Businesses are crucial to the health of any economy and to create jobs which is why there are also many government schemes that businesses can avail to get financing. If you are looking to apply for a business loan online, click here.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
