Introduction to Business Loan
The definition of a business loan is a financial instrument that can be used to cover both unexpected and anticipated expenses. A business loan loan is borrowed money that businesses use to cover costs they can’t afford on their own in the short term.
Loans are not provided without charge. As the cost of borrowing the money, lenders charge interest on loans. Knowing whether the interest is fixed or variable is crucial. A fixed interest rate is one that doesn’t change over the course of the loan or its payback period
Benefits of Business Loan
- Financial Flexibility
- Business Expansion
- Technology and Equipment Investment
- Building Credit
- Tax Benefits
- Improved Vendor Relationships
- Emergency Funds During Downturns
- Marketing and Promotions
- Talent Acquisition and Training
Business Loan Eligibility Criteria
Here are the criteria for business loan eligibility:
- Credit Score
- Business Age
- Annual Revenue
- Cash Flow
- Debt-to-Income Ratio
- Collateral
- Business Plan
- Industry Type
- Legal and Regulatory Compliance
- Outstanding Debt
- Purpose of the Loan
- Personal Background.
To avail a business loan, an applicant needs to provide the following documents as per the lender’s requirements.
- Identity Proof: Driving License / PAN Card / Passport / Voters ID Card / Aadhaar Card.
- Address Proof: Ration Card /Telephone Bill / Electricity Bill / Passport / Trade license / Lease agreement / Sales Tax certificate.
- Income Proof: Bank Statement of Last 2 Years.
- Financial Documents: Last 2 Years ITR along with computation of Balance Sheet, income & Profit & Loss a/c for the last 2 yrs.
- Proof of Business Continuation
- Business Ownership[ Proof: Other Mandatory Documents such as Sole Proprietorship Declaration, Certified true copy of Memorandum & Articles of Association
- Last 3 years audited financials.