Business Loans

Money or funding is the lifeline of any business be it a new one you are establishing or expanding an existing one; securing finance is a critical factor.

Many entrepreneurs or business owners find the task challenging and don’t even know where to begin. So was my friend Swati who has her own wholesale gift shop where she offers articles, personalized gifts, personalized cakes and flowers for birthdays, anniversaries, weddings etc. You have to just describe the gift you want and she will assemble it for you.

She had gained popularity in a span of 2-3 years due to her personalized gifting ideas and was now receiving orders from other cities, so she was ready to expand. She put up a business plan on how she would expand, and as social networking and e-commerce were gaining importance, she decided to move into online gifting platforms and using social media for marketing. Her plan required hiring a web developer, consult a social media marketing firm, content writer, photographer, more workers, buying more materials and so on.

All of this would need finance and she had no clue on how she could fund her expansion. The answer she came across was business loans. All major banks like ICICI, HDFC, Axis, Kotak Mahindra etc and financial institutions like Bajaj Finserv, Tata Capital, Fullerton etc are now happy to lend you a business loan for expansion. Here are the tips shared by her through her research and experience shopping for a loan.

Who is eligible for a business loan?
You should be the owner of a business/company and your age should be between 21 to 65 years. Your business should be atleast 3 years old. The turnover (revenue) should be atleast 50 lakhs per annum with a minimum profit of 2 lakhs. The documents required also include ITR statements from the last 3 years. You can also have your business partner as a co-applicant as it would increase the chances of getting the loan with an acceptable tenure along with the best rate of interest.

What do banks look for while processing a business loan?
Different banks or financial institutions have different standards when they lend business loans, but few common traits are as below:

• The loan must be for a valid business purpose. Business must meet eligibility criteria based on size, annual turnover, profits, no of years of existence and use of loan proceeds
• Business owners and partners should have requisite experience and verified personal and/or business credit history
• Though business loans are unsecured, banks prefer if the applicant/s has own property or stays in an owned house. It is not mandatory though.

Here are the important factors to keep in mind to make the process easier,

Analyze your capacity to repay which means that you must be able to afford the EMIs. It is easy to find out your affordable EMI with nifty tools at your disposal. For example a site like say https://cashkumar.com/flat-interest-rate-vs-reducing-balance-interest-rate-calculator, can help you find out the EMI for a specific loan amount and tenure if you enter your details. You can work around with the loan amount and tenure to find out the exact EMI you can afford. This can help you decide your expansion plan better to gauge what you can afford or grow in phases.

The next factor is the bank or NBFC you apply for a loan as it will determine criteria like low interest, favorable tenure, quick approval etc. You cannot assume that a specific bank which holds your account will extend you the best terms of principal, rate of interest and tenure. You must shop around and look at the terms offered by all the banks in the market. A different bank might offer a better rate of interest based on criteria like higher turnover or years of operation. So we advise you not to take a deal from a call center but check with Cashkumar to not just compare banks but also get consulted by experts and get doorstep service.

There are avenues to get finance for your business on this platform whether you have a start-up or own a small business. While conventional routes through banks and NBFCs are closed when you are looking at business loans for start-ups in India, there are other ways of procuring that finance. Options like private finance, individual lending as well as peer to peer loans open up if you are searching for small business loans India. Startup business loans India is something many new entrepreneurs search for and new avenues like crowd-funding and P2P routes are available to meet these requirements. We work with not just banks or NBFCs but also with private finance companies, private lenders, and individual lenders through the P2P platform to help you get a loan. These multiple access points through a single website saves you as a startup business or SME the hassle of approaching multiple sources of funding and use your time productively. Having different options also helps small businesses get the best deals from different sources and opt for the best.