Every business in its life span has a loan facility and availing of a loan is a serious business. The majority of the businesses generally need financial support when they are growing horizontally or vertically. The business owner can avail of a loan in the form of an unsecured business form, machinery loan, working capital loan, or secured term loan. It is always advisable that every business owner should vouch internally for why there is a need for a loan or ultimate utilisation of loan; it helps the business in saving the interest cost. The business loan may improve the business stability, but failure to repay the loan installment on time can quickly reduce the credibility. Different businesses have different kinds of credit score requirements. A strong business credit score is essential to gain affordable credit at a competitive interest rate. A business owner should retrieve up-to-date credit scores time-to-time to ensure he/she can work towards strengthening the credit score.
The second wave of the COVID-19 pandemic has significantly affected small businesses. Many businesses had to shut down their operations, while others closed their doors temporarily without further notice. This uncertain situation has had an upsetting financial burden and hence businesses require quick financial support to navigate the storm.
In such a situation, an instant business loan can be considered a lifesaving drug for any business owner. An instant business loan is a quick, small loan that is offered within the shortest time possible with the approval procedure for the loan being a lenient one.
Benefits: Online Instant Business Loan
The key benefit of opting for an instant business loan is that the borrower gets the cash instantly to meet their contingency expenses. The eligibility criteria for the loan are also simple and hassle-free, which enable the borrowers to expect the cash at their disposal.
- Eligibility criteria: An instant business loan has a broad eligibility criterion; however, with the help of online applications, small businesses have access to loans that do not access credit from other banks/NBFCs.
- Creditworthiness: This type of loan helps to calculate the borrower’s creditworthiness and does not just depend on the CIBIL™ score.
- Loan products: An instant business loan product includes working capital loan, capital loan, machinery loan, and term loan that are formulated to meet the different and individual needs of small business owners.
- Online process: The borrower can check the application status online and avail of the account statement and EMI schedule via email.
- Processing time:Online loan disbursement can take four to six days after approval.
- Penalty: There is no penalty levied on the prepayment of the business loan.
Eligibility criteria
Every bank/NBFC has its own eligibility criteria. The online lending platforms do not have stringent eligibility criteria because they do not believe in burdening the loan applicants. Generally, a business owner is eligible to get a business loan if
- The applicant has been in the same business for the last three years with a minimum turnover of 20 lakh rupees;
- The applicant has a valid business registration certificate;
- The applicant has given the declaration of existing credit obligations;
- The applicant lives in the same residential address for at least a year;
- The borrower provides permanent proof of residence;
- At the time of availing the loan, the applicant’s age is not less than 23 years, and at the time of maturity, the age must not be more than 65 years;
- The manufacturing unit is operational for the last one years;
- IT returns are filed for the last two years without delay;
- GST returns are filed on time for the last 12 months.
Business Loan Procedure
By simply following three easy steps, a borrower can avail of an instant online business loan:
- Apply online: Apply on the lender’s website or through online applications for business loans. Duly fill the loan application form and submit it.
- Upload documents online: Upload the soft copies (as per lender requirement) of the below-mentioned documents:
1. Three-year ITR along with computation;
2. Financial includes P&L and Balance Sheet;
3. Bank Statement 1 year PDF;
4. KYC- PAN Card and Aadhaar Card;
5. Residential Proof- Electricity Bill;
6. Office Proof- Landline Bill;
7. GST Registration;
8. GST Returns;
9. VAT Returns.
Fund transfer: Once the lender approves the business loan, the business loan amount is disbursed directly in the mentioned bank account (shared at the time upload document) within a few days after signing the contract.Let’s discuss the lender risk associated with extending the credit to the business. This is important information for any business borrower that will help him/her to take proactive action to avoid being declined approval from a lender.
Any lender can expect the below-mentioned credit characteristics in any borrower.
- Borrower character: The lender always weighs work knowledge and expertise in the domain of the borrower. The lender also values the good reputation, honesty, and integrity of the borrower whether he/she has the willingness to meet the obligations.
- Borrower capacity to repay: In addition to the borrower’s willingness to repay the loan, lenders are interested in the capacity for repaying it. The lender will examine the borrower’s business to determine whether they have sufficient liquidity to make payments and continue to operate the business.
- Borrower commitment: The borrower must convince a potential lender about his/her financial and personal commitment to the business. The personal choices include demonstrating a commitment to the business, including where your residence is and how many hours you devote to work. By assessing the borrower’s financial commitment, the lender values how much risk the lender carries.
- Conditions: The economic and environmental conditions are beyond the borrower’s control, but lenders consider these factors extremely sensitive. At the same time, lenders consider how these factors might affect the borrower’s business as part of their decision about extending credit. The lender will also examine consumer trends to evaluate whether they can affect the future success of the borrower’s business.
Grow your business with India’s largest small enterprise finance company—Shriram Finance business loan. Our loan processing includes instant processing, minimal documentation, a flexible repayment schedule, and quick disbursal. Our professional trained finance team helps the borrowers to find the right loan at the most affordable rates for their business as well as explains the procedure to apply for an online business loan. We also help from finding the right product to the documentation required for a loan, get all the details on what is required to apply for a small business loan.
You can also check your monthly obligations using this link: Business Loan Calculator. Whether you seek funding to get a new business off the ground or need an infusion of cash to see you through a temporary setback or when sales are low during a crisis, visit Shriram Finance business loan for loan requirements. Apply for an online business loan.
