How to get new business loan?

A A business loan in India is an unsecured loan for business purpose like business expansion, maintain working capital needs, purchasing plant or machinery, increasing stocks and inventory. There is no need to mortgage any properties for taking a loan. Bank or NBFC offer this Loan for self-employed Non-professional and Loan for self-employed professionals (Professional Loan-Doctor/advocate etc..). Bank offers this loan on basis of their financial and banking behavior. For Get an instant business loan(Personal loans for business), a self-employed maintain his good business flow and maintain his good transaction behavior with Bank/NBFC, will be eligible for taking funds.

Understanding Business Loans in India

In India, business loans are essential for entrepreneurs looking to expand their ventures. These loans provide the necessary capital for various business needs, whether it’s for starting a new enterprise, scaling operations, or meeting short-term financial commitments. Understanding the different types of business loans available and the application process can greatly aid business owners.

Business loan – Read this article in Hindi

Types of Business Loans

Business loans in India come in various forms, tailored to meet different business requirements. Common types include term loans, working capital loans, equipment financing, and invoice financing. Each type comes with its own set of advantages and specifications, making it crucial for you to assess your needs before proceeding.

• Term Loans: For long-term investments like infrastructure or equipment.
• Working Capital Loans: To manage day-to-day operations.
• Machinery Financing: For purchasing or upgrading machinery.
• Invoice Financing: To fund cash flow gaps by borrowing against outstanding invoices.

Benefits of Business Loans

There are several advantages to taking out a business loan. Firstly, it provides immediate access to capital that can be crucial for business growth and operation. Secondly, business loans often come with flexible terms that can be customized to fit the specific needs of the borrower. Lastly, acquiring a business loan can help improve a company’s credit score when repayments are made on time, paving the way for better financing opportunities in the future

1. Immediate Access to Funds: A business loan helps manage expenses or fund expansions.
2. Flexible Repayment Options: Choose repayment terms based on your business cash flow.
3. Improved Credit Score: Timely repayments on your business loan can enhance your credit profile for future funding.

What are the Eligibility Criteria for business loan (Best business loan)?

Before applying for a business loan in India, it’s important to meet certain eligibility criteria set by the lenders. Generally, these criteria include:

Before applying for a business loan in India, ensure you meet these general criteria:

• Business Vintage: Minimum of three years of business operations.
• Office Stability: Must have operated from the same location for at least one year.
• Turnover: Minimum ₹50 lakhs per annum, with consistent growth. Declines in turnover should not exceed 10%.
• Profitability: Net profits for the past two years. Losses may be acceptable if the cash profit hasn’t declined more than 5%.
• Credit Score: A good credit history (700+ CIBIL score) is crucial.
• Property Ownership: Self-owned property in the same city as the business adds credibility.
• Purpose of Loan: Clearly outline the reason for the business loan, such as expansion, inventory purchase, or machinery procurement.

How to Apply for a Business Loan (Business Loan Application Process)

Applying for a business loan in India involves several steps:

1. Research and Choose a Lender:-Identify potential lenders who offer business loans that match your requirements. This includes banks, financial institutions, and online lenders.
2. Prepare Documentation:– Gather all necessary documents, including your business plan, financial statements, and proof of business operations.
3. Submit Application:- Complete the loan application form provided by the lender. Ensure all details are accurate and truthful.
4. Assessment and Approval:- The lender will review your application, verify documents, and assess your creditworthiness. If approved, you will receive the loan amount as agreed.

By understanding these steps and following the necessary procedures, you can smoothly navigate the process of obtaining a business loan in India. Make sure to compare different loan offers and evaluate their terms to find the best fit for your business needs

1. What is Banking Parameters for Business Loan-SME Lending ?

1. Bank statement should be current account or OD/CC account and it’s open date should be 1 years old for business loan.
2. Main business account will be considered.
3. Minimum 36 Business Credit Transection should be in Bank statement.
4. Saving account will be considered for Professional ( CA/DOCTOR).
5. Average bank balance should be good as minimum equal to EMI of Proposed loan amount..
6. No EMI bounce in last 6 months.
7. Maximum 5% cheque return allowed in bank statement.

What is financial obligation meaning(business loan)?

Any type of debt , liability taken form bank or any other sources is called financial obligation such as any type of loan , CC/OD account, credit card etc. It’s represent any type of outstanding debt.

During Loan application process, bank count monthly obligation which customer repay each month to bank. Bank also count 5% of total outstanding of credit card limit.

Monthly obligation= Total current running loan EMI+CC/OD interest per month average+ 5% of total outstanding of credit card limit.

Cash profit = Profit after tax + Depreciation + partner or director salary + interest of partner or director

How to calculate debtor days?(business loan)

Debtor days;- After how many average days you get your money from debtor as you sells goods to your Debtor.

(AVS one day means average sells everyday)

At first your find your average sells in single day AVS per day =Total sells per annum/365 days

Than Total Debtor days = Total debtor Amount/ AVS one day.

Debtor Days = (Total Debtors) ÷ (Average Daily Sales)
(Average Daily Sales = Annual Sales ÷ 365)

How to calculate creditor days?(business loan)

Creditor days:- After how many average days you will pay money to your creditor as you purchase goods form creditor.

(AVP one day means average purchase in a single days).

At first, your Find your average purchase in single days AVP one day= Total purchase/ 365 days.

Total Creditor days= Total creditor Amount/ AVP one days.

Creditor Days = (Total Creditors) ÷ (Average Daily Purchases)
(Average Daily Purchases = Annual Purchases ÷ 365)

NOTE:- Good debtor days and creditor days should be 90 days or maximum it should not be more than 120 days.

Mandatory Documents(business loan):-

FAQ(BUSINESS LOAN)

HOW TO APPLY FOR BUSINESS LOAN IN INDIA

Some Important article link, Read also

• How can we get Personal Loan?
• How can we get Car Loan?
• How can we get Home loan?