The majority of the Indian population is involved in business or knows someone interested in entrepreneurship. If you are in either of these categories, you must be aware of the scuffles people associated with business face.
Having a smooth-running and profit-making business is a dream for many, but only a few manage to achieve it. One must have proper planning, strategy, investment, customer feedback, support, and opportunities to run a business successfully.
Entrepreneurship is continuously associated with risks such as heavy competition, lack of capital, and low productivity. A business can thrive and make tremendous progress only when it has the financial resources to run everyday operations.
To do that, companies need more funds to
- Set up a cordial work environment for their employees
- Meet daily operational costs, office utility bills and supplies, staff salaries
- Purchase new hardware, technology, and software to upgrade the existing infrastructure
- Recruit new employees
- Buy raw materials
- Expand business in a new city, state, or geographical location.
These are the reasons why a business person needs financial aid.
Ideally, they can get a loan and cover various work expenses. Eligible candidates can acquire Rs 50,000 to 40,00000 for 12-72 months with reasonable interest fees from 10.75% to 24% p.a.
The actual loan amount depends on the bank, the credit profile of borrowers, the loan amount, overall condition of the business, credit score, and their performance in interaction with bank executives.
How to apply for an online business loan and procure it successfully?
Personal Loan For Business People: A Checklist of To-Do-List
Check Personal Loan Eligibility Criteria First.
Banks demand definite eligibility criteria while offering personal loans for the business personnel. The criteria include the following terms and conditions,
- The applicant must be an Indian citizen.
- Should be of 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
- The applicant must have a physically verifiable permanent address with documentary proof.
Do You Have A Concrete Business Plan?
Banks have stringent requirements for credit facilities for business owners. As a result, getting a personal loan for a business becomes a challenging task.
Before applying for a business loan online, the borrower must have a concrete business plan with satisfactory detailed reports for their business that persuades the bank to provide them with the additional funds.
If you are a tech-savvy business owner, you can create a digital layout of your future business plan and highlight capital requirements in diagrams and charts to increase your chances of getting a loan.
A clear presentation of goals and a plan of action can make your application stand out from the crowd and compel the banker to have a look over it. Never exaggerate anything in the business plan, and mention only the actuality to the banker.
A team of experts will scrutinize your application with the present condition of your business and the requirement for funds. Your presentation and the ground situation should be the same. Applicants with a concrete business plan and serious intention (of taking a personal loan for business) tend to impress the banker.
Business Loan Amount
Only a zealous business owner would understand the importance of sufficient capital. A lot of financial resources are consumed to conduct daily business operations successfully and ensure a company’s profitability.
The shortage of funds hinders the usual business activities of the company.
If there is a shortage of funds, the company will not conduct its usual business activities and sell its product and services. No matter how generous or big-hearted a business person is, they cannot run a business bearing regular losses.
Review your requirements carefully before sending in your application to the banker.
Calculate the amount of money that would be sufficient to cover essential business needs and to run the business smoothly. Accurate data is necessary to attract the banker’s attention and get a positive response. If you demand a loan that exceeds your early business income, the bank will reject your application without considering it.
Use the loan calculator and determine how much money is needed. Ensure that you choose a loan amount under your budget and repayment potential to avoid severe consequences for the evasion of a business loan. Defaulting on a business loan not only affects your credit score but also reduces the reputation of your business organization. In the worst-case scenario, the bank might take legal action and sue you and your business. 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
Leading banks in India offer online personal loans for businesses with varying rules, regulations, and interest fees.
The market is filled with numerous offers with exciting features and benefits. Externally, all the advertised business loan products might look upright. However, remember 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. Compare and consider different offers of personal loans for businesses before applying for a business loan.
- Examine loan offers, interest fees, tenure, EMI breakup patterns, processing fees, and other applicable charges.
- 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 chart of various offers will allow you to choose a suitable package for your business needs. Obtaining the loan on favorable terms is significant to prevent interest payments from smothering the business gradually. Remember 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
The following documents are needed to get a personal loan for business.
- 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 requires multiple sets of documents to verify the borrower’s details. The availability of reports and documents would make it easier for bank executives to evaluate a borrower’s creditworthiness/potential and make a suitable decision accordingly. Providing fake documents for loan applications is strictly prohibited, and when such occasions arise, the Bank and regulatory authorities may penalize you for this.
- The Personal Loan Application Process
After the initial homework and finalization of the loan amount, it’s time to apply for an online business loan. 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 blunders and oversight. Recheck the application and if you find any incorrect data, refill a different application with accurate details and submit it.
Submission of precise data is significant if you wish to solicit the banker’s attention and get a swift response from their side. A large number of people prefer to submit their applications digitally by visiting the website of the bank they selected as it saves their 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. Beware of fake websites that look eerily 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 after the other. If your profile looks decent and all the provided data are precise and accurate, the bank will invite you for further discussion. Be confident while talking to bank executives and answer their questions with utmost clarity. It is essential to convey your desire and explain your need for a personal loan for business.
A team of experts will conduct background checks and 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 consume a great deal of your time and resources, and maintaining patience throughout the stringent verification processes and formalities is advised. Proper communication and attitude play an essential role in the approval of your application. Never argue with bank executives and cooperate when they conduct formalities critical to processing your application.
Applications with misleading information or missing details are useless to bankers, and such applications are rejected instantly. If you complete all the loan formalities and the banker is moved with your profile, the chances for the approval of your application increase 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 officials will verify your credit score and your company’s debt. Companies take multiple loans over their lifetime for several business activities, and repaying the loan at the right time boosts your business’s reputation in front of the banker. 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 might make the banker question your repayment potential. That may affect your chances of getting a personal loan for business. Keep your company’s financial record and personal credit score at the most acceptable level to improve the chances of 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 for the bank to approve your loan amount. The sanctioned amount will be credited to your account after the deduction of the loan processing fee. Online fund transfer from one account to another is relatively secure and swift. From there on, you can use the received loan money to meet essential business needs.
The loan EMIs are automatically deducted from the borrower’s bank account. The bank uses this automatic loan repayment technique to help the borrower repay the loan quickly and comfortably. It is a helpful technique that keeps borrowers afloat from the hassles associated with the traditional loan repayment method.
It would also help you keep a sufficient balance in the specified bank for successful loan repayments.
If there is a delay in the loan repayment, the bank executive will contact you immediately. Due to technical glitches, the automatic loan repayment may not go through. When such a situation arises, you must get in touch with the bank at once and arrange a different date for loan repayment. If the bank doesn’t get the loan EMI on time and you don’t return their calls, it may invoke the right to impose severe penalties against you.
What To Do If The Bank Rejects Your Application For A Business Loan Online?
Banks are particularly severe when it comes to credit lending practices. Your application for a personal loan might get rejected for a variety of reasons. The reasons 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, and due to other inadequacies on your part.
It would be best if you investigated the reason behind the rejection of your application and address the issues outlined by the bank executives.
Find a company ready to act as a guarantor for your loan. This way, the risk of your loan application getting rejected will be conceivably low. Submit your application again for a business loan online without mistakes. Remember that banks offer personal loans only to the most suitable business people.
Personal Loan for Business is a boon for all individuals struggling to remain afloat in the business world and for owners needing additional funds to stabilize their financial condition. Eligible candidates can get a business loan online and cover several business-related expenses.
Running a successful business venture is no easy feat. Therefore, a business owner must thoroughly research, calculate the best personal loan interest rates, and examine various offers before applying for a particular loan. That way, you are setting your business up for triumph.