What is The Easiest Way to Get a Business Loan?

Starting a new business can be challenging and it requires a large reserve of funds. After all, as a new business owner, you need to not only consider set up costs, but machinery, maintenance, rent, labour, and plenty of other expenses as well.

A business loan helps cover all these business-associated costs. And now, thanks to the internet, applying for one is easier than ever. Here's how you can apply for a business loan easily.

1. Know Your Eligibility

The first thing you should do before applying for a business loan is to see if you are eligible for it. Keep in mind that the eligibility criteria varies slightly depending on your lending partner. That said, here are the typical eligibility specification of most lenders:

Financial

● The applicant's minimum turnover should be Rs. 1 crore in the latest financial year with 3 years' worth of audited financials.

● The applicant's most recent three years of PBDT (Profit before depreciation and tax) should be positive.

● The applicant's paid-up capital must be at least Rs.10 lakhs.

Non-financial

● The applicant should be between 25 years - 70 years.

● The business should be running for a minimum 3 years.

● If the applicant wishes to apply for a loan of a minimum of 4 lakhs, they should have a clean 12-month record.

● The applicant should be the owner of the property.

2. Know About the Documents Required

Being aware of all the documents you may need when applying for a business loan can make the application process a whole lot easier. Some of the documents that you may require to apply for a business loan are:

● KYC documents

● Business continuity proof includes company pan card, GST registration, SSI certificate and others.

● Ownership proof documents like copies of sales deeds and the latest proprietary tax.

● Bank statements for the last six months.

● Constitutional documents and financial proof.

3. Good Business CIBIL Score

Financial institutions look at the business's credit score before approving a loan, and it verifies a business's dependability and capacity to pay off debts. A company with a high credit score is more likely to be trusted by financial institutions to repay loans. Many lenders also provide affordable interest rates to borrowers with a good CIBIL score.

4. Low Debt-to-Income Ratio

Debt-to-income ratio, or DTI, is a financial measurement that compares the amount of debt versus your income. The debt-to-income ratio shows your ability to repay the loan.

The lower the debt-to-income ratio, the higher the chances of getting easy approval for your business loan. However, if you have a high percentage, you should try to bring it down before applying for a business loan. Clearing off existing debts is the easiest way to do this.

5. Apply Online

When you can sell and buy anything you want online from the comfort of your couch, why not apply for a business loan online? Because of the easy documentation, doorstep service, and the option to apply online, applying for a business loan has become easier than ever.

You only have to follow the steps below to apply for a business loan.

● Go to your preferred financial institution's website and go to the business loans section.

● Click on 'Apply.'

● Fill out the application form with all the necessary details. And upload all the required documents.

Once the financial institution verifies your documents and application, the business loan amount will be disbursed to your account in no time.

Parting Thoughts

Lastly, before applying for a business loan, be aware of the amount you need for your business. This way, you only apply for a loan amount you can repay comfortably.