When it comes to running a business, you are constantly faced with the challenge of raising ample funds to manage overheads. While some businesses may have to deal with delayed payments, others may even have to work around a dipping market. You may even have unexpected expenses, may need added funds to expand the business, or purchase new tools and equipment.
No matter what requirements you have for your business, getting a Business Loan is one of the most reasonable and reliable options available to raise the funds that you need. Before you apply for any loan, make sure that you check the eligibility criteria thoroughly to increase your chances of getting an approval.
A Business Loan is provided by banks, non-banking financial companies (NBFCs), and other financial institutions, solely for the purpose of business operations. This could be for an existing business or even a new business. Business Loans can be availed by proprietorship firms, partnership firms, limited liability partnership (LLPs), or any type of organisation to fulfill the following requirements:
Whenever a bank or an NBFC extends any finance to a business, they look for certain eligibility criteria. These are criteria which the bank makes use of in order to decide how viable the business is and what are the risk factors involved in extending the credit facility.
The eligibility criteria help the banks determine the following:
To increase the chances of approval on a Business Loan, the applicant should meet some business loan eligibility criteria. This may differ from one bank to another. However, there are certain factors that are common to most banks, as mentioned below.
There are various factors that affect the eligibility for a Business Loan. This not only determines whether the loan will be approved or rejected, but can also affect the interest rate that is charged on the loan that is extended.
The most common factors that affect Business Loan eligibility are as follows:
As mentioned before, the eligibility criteria for each bank is different.
Here is a list of the top banks and their respective eligibility criteria for Business Loans:
|Name of the Bank||Eligibility Criteria|
The following can apply for a Business Loan:
In order to confirm that the applicant fulfills all the eligibility criteria required by the bank, certain documents are necessary.
The documents to be submitted along with your Business Loan application are as follows:
|Proof of identity||Voter's ID/ Passport/ PAN Card/ Driver's License/ Aadhaar Card|
|Address proof||Ration Card/ Utility Bills/ Passport/ Lease Agreement/ Trade License/ Sales Tax Certificate|
|Proof of income|
|Viability of business (start-up)|
With MyMoneyMantra, checking your EMI for a Business Loan is very simple. To begin with, you have to access the EMI Calculator to calculate the EMI of the loan. This can be done by providing details like the loan amount, the interest rate, and the tenure of the loan. Once you have the accurate EMI, you can determine if you will be able to make regular repayments or not.
One of the best options to get a Business Loan is through MyMoneyMantra.
Here are some benefits of applying for a loan on MyMoneyMantra:
If you have decided to apply for a Business Loan, here are a few factors that you need to consider:
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Usually, banks require candidates to fulfil all the eligibility criteria. Depending upon your relationship with the bank, you can still get an approval with a higher rate of interest and higher collateral.
The primary difference is that the rate of interest charged on the overdraft is higher. You get an overdraft against the current account or savings account while a working capital is a short term loan provided to increase cash flow.
This changes with each bank. However, you can get up to 25 years for repayment of Business Loans.
You can get loans against property, fixed deposits, or any other assets as per the requirement of the bank that you are applying for a loan with.
The bank values the existing assets of the business as well as assets purchased using the loan in case the need to be used in order to recover the loan provided.
You can check the eligibility for a loan by contacting the customer care of the bank or by visiting the branch. You also have tools like eligibility calculators that help determine if you are eligible for a loan. Most banks list the eligibility criteria on the website as well.
If you have a high credit score and the business is generating profits, there are chances of getting an unsecured loan. Depending upon the nature of your business, you can also opt for loans that are backed by a credit guarantee.