Business Loan
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Steps To Apply
- Determine the necessity for a loan : It is critical that you determine the need for a loan. The government and other agencies conduct a variety of plans and incentives to assist businesses in establishing and growing.
- Creating a business plan entails the following steps :
You’ll need money to start or expand your firm. A precise plan of action for putting the money to its proper use is required. - Make sure your papers are in order :
This could be the most challenging part of getting a company loan. Financial transactions, taxes, permits, and other aspects of corporate operations are significantly more complicated. As a result, before granting your loan, a lender will want to gather as much information as possible and conduct rigorous due diligence.
Are you looking for getting your business investments then we can help you with the best loan services?
What is business loan and how does it work?
A good business loan can help you receive the money you need to start a new firm, expand an existing one, get working capital, and more. However, not all business loans are made alike and knowing how each sort of loan works will help you figure out which one is best for you and your company.
Lenders provide capital to firms in the form of business loans. Lenders want repayment of the principal plus interest and fees in exchange for this money. Business loans usually need consistent payments on a predetermined schedule, but repayment terms and interest rates might differ significantly. Lenders may do a credit check on your firm if it has long credit history to determine how it has handled credit in the past. Bad credit history for your business could make it difficult to get authorized for low-cost financing.
Who can get a business loan in India?
People that are qualified to apply for a business loan include:
- Self-employed people, sole proprietors, private limited companies, and partnership firms in the manufacturing, trading, or service industries.
- The company should have a minimum annual revenue of Rs. 40 lakhs.
- Individuals having a minimum of 3 years in the current business and a total of 5 years in the business.
- Those who have made a profit in their firm during the previous two years.
- A minimum annual income (ITR) of Rs. 1.5 lakhs is required for the firm.
- The applicant must be at least 21 years old at the time of loan application and no more than 65 years old at the time of loan maturity.
What is the business turnover and how is it calculated?
Divide the cost of goods sold (COGS) by the average dollar value of inventory for the accounting period to get the inventory turnover ratio. The average inventory value is calculated by multiplying the inventory value at the start of the accounting period by the ending value and dividing it by two.
Assume COGS is $2 million and inventory is $400,000 on average. The inventory ratio is calculated by dividing $2 million by $400,000, which equals 5. To put it another way, your company sells its on-hand goods five times a year. The faster the turnover, the higher the inventory turnover ratio. The goal is to increase turnover as much as possible while not running out of custodial supplies.
What is the minimum required turnover of business to be eligible for business loans?
Obtain a loan of up to Rs. 40 lakhs (up to Rs. 50 lakhs in select regions) with no collateral (Collateral is a required element that a recipient must keep with him in order to obtain a loan). Securities can be used as a form of collateral.) , guarantor (A guarantor is someone who ensures someone else’s payment.) In the event of default, a guarantor becomes a co-endorser and assumes liability.) or security, to meet all of your business needs, from growth and working capital to your child’s education or a home remodel.
Eligibility Criteria For Loan
If you’re thinking about getting a business loan, you’ll need to meet several requirements.
- Individuals who work for themselves, as owners, private limited businesses, or partnership firms in the commerce, manufacturing, or service industries.
- Individuals who have worked for the current company for at least three years (plus a total of 5 years of business experience).
- Individuals must be at least 22 years old when applying for the loan and under 65 years old when it matures.
- For the previous two years, businesses have been profitable.
- Businesses with a minimum turnover of INR ten lakhs are eligible.
- Enterprises with an annual minimum annual income (ITR) of INR 2 lakhs.
Particulars | Salaried | Self-Employed |
|---|---|---|
Age(Min-Max) | 23 years to 58 years | 28 years to 65 years |
Income | Rs.25,000 | Minimum turnover of Rs.40 lakhs |
CIBIL Score | Above 750 | Above 750 |
Documents for Loan Application
Salaried | Self-Employed |
|---|---|
Application form with photograph | Application form with photograph |
Identity and Residence proof | Identity and Residence proof |
Last 6 months bank statements | Last 6 months bank statements |
Processing fee cheque | Processing fee cheque |
Latest Salary Slip | Latest Salary Slip |
Form 16 | Business Profile and Previous 3 years Income Tax returns (self and business) |
Previous 3 years Profit/Loss and Balance Sheet |