Published On: Wed, Feb 19th, 2020

How to Get a Small Business Loan?

Small businesses in India contributes the most to the nation’s GDP after the agriculture business. Surprisingly, this contribution comes from over 48 million small business enterprises spread across the country. The initial investment of such companies may sometimes cross the amount of Rs. 30-50 lakhs. And the ones who already own such business need to invest in its development. The owner can’t pay this amount in one go. Being one of the persons with an SME, you might also be facing this issue. Therefore, money lenders provide money as part of business loans. There is a short process you have to complete, and the required amount will fund your business. The process is as follows: 

Research and understand the types of small business loans available and choose the one that best suits your requirements:

Lenders offer multiple small business loans based on the needs and model of your business. They are:

  1. Line of credit loans for a small business where the lender provides you money gradually as and when required.
  2. Working capital loans that are loans for a very short tenure used by the companies to manage the fluctuations in its finances.
  3. Small term business loans in which you have to pay the interest regularly until you return the principal amount that too within three months to 5 years.

Many such other loans are available in the market. You also need to check the interest rates, type of interest (reducing or fixed) provided by the lender, pre-payment schemes, etc. and then choose the small business loan that you want for your business. 

photo/Gerd Altmann

Check the eligibility criteria to Get Small Business Loan sanctioned:

Different lenders have different eligibility criteria for offering business loans. Generally, they consider the following factors to provide a small business loan:

    1. A good credit score: It depends on your current financial status and past credit report. A score of more than 690 is considered as good credit score and lenders prefer giving loans to such candidates. Check your credit report and choose the lender accordingly.
    2. Clear financial statement: Lenders prefer the business that has lesser debts in its financial statements. Look if you can fit in the criteria of liability specified by your shortlisted lender.
    3. Investment and assets in the business: The number of investors in your business describes the quality of your business. Also, the assets that your company owns increase the credibility of your business. Check if you have enough assets to get the loan from the selected lender.

Choose the lender and apply for the loan:

As you all know that there are many sources to get small business loans. Lenders are available offline and online as commercial money lending companies. You can choose the one best suited for your business. The next step is looking at their application procedures. Fill the personal, property, and business details correctly in the application form that is mostly available online these days. After filling the form, wait for the lender to revert to your application.

Get all the documents and decide the value against which you want the loan:

Decide the asset that you want to mortgage for getting the loan. Once the lender verifies and accepts your application, you need to have the following original documents for further process of the loan:

  1. Photographs and address proofs like Aadhar card, PAN cards, Driving license, electricity bills, etc.
  2. Federal Tax ID of your business
  3. The legal structure of the business
  4. IT return file of your business
  5. Other financial statements of the business
  6. Insurance policy papers of the business
  7. Business plan statements
  8. Financial statements of the business firm
  9. Statements/ Bills/ papers of the business assets

Complete the verification step and get the loan amount sanctioned:

Get every document verified and registered in the firm of the moneylender. Decide the EMI for returning the loan amount. Also, confirm the pre-payment conditions and terms with the lender. Finally, the lender will provide you with an agreement. Sign the contract only after reading all the terms and conditions. Once everything is verified, the lender will transfer the loan amount in your business account.

Wrapping it up

After learning the information as mentioned above, you need not worry about your business expansion and development when you are running short of finances. Complete this simple process, and you can get a small business loan to satisfy your business requirements.

Author: Ellen Re

On the DISPATCH: Headlines  Local  Opinion

Subscribe to Weekly Newsletter

* indicates required

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>



The Global Dispatch Facebook page- click here

Movie News Facebook page - click here

Television News Facebook page - click here

Weird News Facebook page - click here