In India, a lot of people are involved in entrepreneurial activities. Having a smooth running & profit-making business organization is the dream of many Indians. To run a business successfully, business people need to have proper planning, strategy, investment, positive feedback from customers, and ample business opportunities. Entrepreneurial activity is always associated with multiple risks such as heavy competition from rival companies, lack of capital, low productivity, etc. A business can thrive and make tremendous progress only when it has the required money to run everyday operations. Many times, companies don’t have sufficient funds to.
- Create an amicable office for employees,
- Meet daily operational costs, office utility bills, staff salaries, supplies,
- Purchase new hardware, technology, software, upgrade existing infrastructure,
- Recruit the much-needed new employees,
- Buy raw materials and
- Expand business in a new city, state, or geographical location.
That is why a personal loan for business is an ideal financial product for all troubled business people. They can get the loan and cover various expenses related to everyday business activities. Ideally, eligible candidates can get Rs 50,000 to 40,00000 for 12-72 months. The lender may issue the loan with reasonable interest fees beginning from 10.75% to 24% p.a. The actual loan money depends on the Bank chosen, the credit profile of borrowers, loan amount, the overall condition of the business, credit score, and their performance in interaction with bank executives, etc. How to apply for a business loan online and get it successfully? Let’s know.
Personal Loan For Business people: A Checklist of To-do-list
Check Personal Loan Eligibility Criteria at First.
Different banks offer personal loans for business people in India with a definite set of eligibility criteria. But, in general, you need to fulfill the following terms and conditions:
- The applicant must be an Indian citizen,
- Age- 21-60 years,
- The applicant’s business entity must be registered and has a GST number,
- The company must be operating in an eligible industry (private limited companies, partnership firms, sole proprietors, public sector companies)
- The availability of invested equity,
- An office,
- Business continuity duration- Minimum 3-5 years,
- CIBIL score- 700 or above,
- The company’s annual turnover (minimum 25 lakh or more), business experience, and location and
- The applicant must have a physically verifiable permanent address with documentary proof,
Do You Have A Concrete Business Plan?
Getting a personal loan for business is not an easy task at all. Banks have stringent criteria for credit lending practices. To take a business loan online, you need to convince the Bank that you need funds from additional sources. Before applying for such a loan, make a concrete business plan with adequately explained details. If you are a tech-savvy business owner, create a digital layout of your future business plan and highlight capital requirements in diagrams and charts.
Also Read : A Detailed Guide on Pre-Approved Personal Loans
A clear presentation of goals and plan of action can make your application stand out from the crowd and force the banker to have a look over it. Never exaggerate anything in the business plan and tell only the truth to the banker. A team of experts will scrutinize your application with the actual condition of your business and the requirement for funds. There shouldn’t be any difference between your presentation and the ground situation. Applicants with a concrete business plan and serious intention (of taking a personal loan for business) impress the banker.
Business Loan Amount
Only an ardent business individual understands the importance of sufficient capital. It consumes a lot of money to conduct daily business operations successfully and ensure a company’s profitability. If there is a shortage of funds, the company will not conduct usual business activities and sell its product and services. No matter how generous or big-hearted a business person is, he cannot run a business bearing daily losses. Before sending your application to the banker, analyze your requirement for money carefully.
Think about how much money will be sufficient to cover essential business needs. Correct data is necessary to attract the banker’s attention and get a positive response. If you demand a loan that is more than the overall income of your early business income, the Bank will reject your application without considering it. Use the loan calculator and determine how much money you need. Make sure that you choose a loan amount under your budget and repayment potential. There are severe consequences of the non-repayment of a business loan. Defaulting on a business loan not only affects your credit score but also reduces the prestige of your business organization. The Bank may take legal action against you and your company in worse-case scenarios. Regulatory authorities can impose heavy fines against your company (for not repaying the borrowed money), freeze your banking assets, and prevent it from conducting any business activities.
Choosing A Banking Partner
Almost all leading banks in India offer personal loan online for businesses with different sets of rules and regulations and interest fees. There are many offers in the market with exciting features and benefits. Externally, all the advertised business loan products look very decent. But you must keep in mind that any random business loan will not suit your requirement in the best possible way. Choosing the wrong financial aid puts additional pressure on the company and damages your interest badly. Therefore, study different offers of personal loans for businesses carefully.
Have a look at loan offers, interest fees, tenure, EMI breakup pattern, processing fee, and other applicable charges, etc. Visit the website of different banks and study their offers one by one. You can also seek advice from independent loan experts regarding a personal loan for business. A comparative analysis of various offers will allow you to choose a suitable package for your business needs. Getting money on favorable terms is essential so that interest payments do not” strangle” the business little by little. Never forget to consult with the managers of India’s leading business banks who focus on selling their loan products to entrepreneurs. Usually, they offer personal loans for businesses with reduced rates & flexible terms.
Collect All Documents
To get a personal loan for business, you should arrange the following documents:
- Personal identity documents,
- Residence proof,
- Business registration papers,
- ITR details or form 16,
- Credit score report,
- Latest six month’s details of the current Bank of your company,
- Audit report,
- Business continuity papers,
- Business volume report, etc.
Note: The Bank needs multiple sets of documents to verify your details. The availability of reports and documents makes it easier for bank executives to evaluate borrowers’ creditworthiness/potential and make a suitable decision accordingly. Never use fake documents for loan applications. The bank and regulatory authorities may penalize you for this.
The Personal Loan Application Process
After doing the initial homework and finalizing the loan amount, it’s time to apply for a business loan online. Go to the nearest branch of the chosen bank, meet the bank manager or any other responsible person, and let him know your desire (to take a personal loan for business). Submit the required details in an application form and review it several times for all possible errors and mistakes. If you mentioned incorrect data in the application form, take another application form and submit the correct details.
Submission of accurate data is significant if you want to seek the banker’s attention and get a swift response from his side. Many people submit their applications digitally by visiting the website of the chosen Bank. Nothing is wrong with this application method, as it saves your precious time and resources. When applying for the loan digitally, make sure you have landed on the right website of the Bank and submitted all details correctly in the proper format. Stop yourself from visiting fake websites that look almost similar to the original website. Submitting your details to a fake site can lead to monetary losses, identity theft, and possible misuse of sensitive data.
When the Bank receives your application, it deploys a team of experts to verify the supplied information and take further steps one by one. If your profile looks decent and all the provided data are found to be correct, the Bank will invite you for further discussion. Be confident while talking to bank executives and answer their questions correctly. It is essential to convey your desire honestly and explain why you are taking a personal loan for business. A team of experts will conduct background checks, interviews and seek feedback from credit rating agencies to eliminate all fraudulent activities.
This process allows only deserving candidates to get the desired loan. All these formalities take a lot of time to be completed. You don’t need to lose your patience with the stringent verification processes and formalities. Proper communication and attitude play an essential role in the approval of your application. Never argue with bank executives and co-operate with them when they conduct formalities critical to processing your application.
Applications with misleading information or missing details are of no use for bankers. They will reject search applications instantly and look at more worthy candidates. If you complete all formalities of the loan and the banker is impressed with your profile, the chances for the approval of your application increases multiple times.
The Importance of A Good Credit Score
No one can deny the importance of having a good credit score while applying for personal loans online. The Bank will look at your credit score and the debt burden your company carries. Companies take multiple loans over their lifetime for several business activities. If they repay the loan at the right time, it positively perceives the brand. You and your company must have a good credit score to get a personal loan for business.
If your company is already struggling to pay existing debt, has a bad reputation in the market, or has a low credit profile, it gives the banker a negative message. Keep your company’s financial record and personal credit score at the most acceptable level to improve the chances for the approval of your application.
Getting The Loan Amount & Use
After submitting your application and completing all the required formalities successfully, you must wait 2-3 business days to get the approved loan amount. You can get the sanctioned amount in your bank account after deducting the loan processing fee. Online transfer of funds from one account to another is relatively safe and fast. You can use the received loan money to meet essential business needs.
To help the borrower repay the loan quickly and comfortably, the bank uses an automatic loan repayment technique. It is a helpful technique that keeps borrowers aloof from the hassles associated with the traditional loan repayment method. The loan EMIs are automatically deducted from the borrower’s bank account.
Therefore, it would help to keep a sufficient balance in the specified Bank for successful loan repayments. The Bank executive will contact you immediately if the loan repayment doesn’t occur as it is supposed to be. Sometimes, due to technical glitches, automatic loan payment doesn’t happen on the date. Therefore, you must contact the Bank as soon as possible and coordinate an alternative day for loan repayment. The bank reserves the right to apply heavy penalties against you if it doesn’t receive the loan EMI at the right time and you are not replying to their calls for the same.
What To Do If The Bank Rejects Your Application For A Business Loan Online?
Banks are pretty strict in credit lending practices. They may reject your application for personal loans for many reasons. It may include your inability to complete all terms and conditions or formalities, lack of required documents, poor credit scores, the quest for a considerable amount, etc. You must explore the reason behind the rejection of your application and work on those issues outlined by bank executives.
Find a company ready to act as a guarantor for your loan. It will reduce the risk of issuing a loan to your business organization. Submit your application once again for a business loan online without making any mistakes and see what happens. Remember that banks offer personal loans only to the “fittest business people.”
Personal Loan for Business people is a boon for all individuals struggling in the business world and need additional funds to stabilize their financial condition. Eligible candidates can get a business loan online and cover several expenses related to business. Before choosing one particular loan, you must do proper research, calculate personal loan interest rates and study various offers. The timely availability of the much-needs helps companies survive the extraordinary situation.