All You Need To Know About a Business Loan In India
Doing something you enjoy and making a whole career out of it is what many people dream of while working on a boring desk job day after day. What if we told you there is a way you can start your own business and make money using your talent without emptying your bank account? Yes, you heard that right.
Business Loans give you the opportunity to try your hand at being your own boss.
The trend of startups is experiencing maddening growth because it's easier than ever now to start your own business. As of 30th June 2022, India registered a rise of 15400 % in the number of startups! If you are wondering why that is the case, let us tell you that business loans have a big role to play in this story.
Availing a Business Loan
Business loans are one of the most affordable types of loans available in the market. They can be obtained at a reasonable rate of interest from many financial institutions. Here are some factors that affect your business loan interest rate:
• Nature of business:
The type of business you are running plays a key role in the business loan interest rate. The place where you are conducting your business activities should not be on a blacklist and your business should be a profit-making business.
• Credit score:
Your credit score is your ability to pay a loan back and therefore a good credit score will give you a lower interest rate.
• Profit earned by the business:
If your business has been operating for longer than a year, banks usually ask for statements to check your profit potential. A positive statement will give you a lower business loan interest rate as it shows your strong repayment capacity.
• Repayment history:
Banks often look into your repayment history when considering your business loan application. A repayment history that does not have any defaults or delays will get you a low rate of interest.
• Annual turnover:
Your annual turnover is a key factor in your business loan interest rate. A higher annual turnover will allow you to have a lower business loan interest rate where as a low annual turnover will give you a higher interest rate.
Documents For Availing Business Loan
Here is a list of all documents required for availing business loans:
• Company Documents:
PAN Card, address proof, GST registration certificate, and other applicable registrations
• Proprietor/Partner/Director documents:
PAN Card, Aadhaar card, electricity bill, or rent agreement
• Income Documents:
Income Tax Returns and computation for the latest 2 years, Profit or Loss statement and Balance Sheet for the latest 2 years, GST Returns
• Bank Account Statement:
12 months bank statement
How to avail business loan?
Here’s a guide, step-by-step, on how to avail business loan in India:
• Establish the amount needed:
First and foremost you need to decide the amount you need to borrow. Borrowing the right amount is a crucial decision to make as it will decide your monthly EMI and the amount of interest you will be paying.
• Research through a loan calculator:
Use a business loan calculator to understand and plan better. Use it to find out your business loan duration.
Visit the website of LTF and fill out the enquiry form. The team will get in touch with you and will guide you through the online application process.