Banks and NBFCs these days have several provisions for start-up loans, small-business loans, business line of credit and what not to promote businesses and help them grow.
How to qualify for a business loan?Here are a few steps which can help you qualify for a business loan easily -
1. Maintain a good credit scoreYour credit score determines your ability to repay a debt and a good score ensures bankers and lenders that you can indeed pay the loan back in time. So, ensure that you maintain a good credit history, clear off any outstanding dues ( if any) and then apply for a business loan.
2. Arrange for documentsThere is a list of documents which is demanded by the lender/banker along with a business loan application. Having them in place ensures that you qualify for a loan easily. These documents usually include the following -
Personal and business income tax returns
Balance sheet and income statement
Personal and business bank statements
Commercial lease (if any)
Articles of incorporation
Growth projections/Business plan
Details about the team (management team, especially)
3. Present a compelling business planBefore giving out a business loan, banks like knowing the ins and outs of the business including how much profit the business makes, what is the projected profit for the year, the business plan, etc. Business owners are required to present a detailed business plan to the bank along with their application for the loan. The plan must include the purpose for which the loan amount will be used and how it will help the business grow. If it is strong and compelling enough, chances of qualifying for the loan are higher.
4. Provide collateralBusiness loans are slightly different from personal loans. When you apply for a personal loan you are not asked to submit any collateral but in the case of a business loan, it is necessary in most cases to provide collateral. Arranging for collateral can increase your chances of getting a business loan.
5. Business Revenue and ProfitAs a business owner, you are supposed to provide proof of your revenue and profits to the bank/lender. It is important for you to submit this proof as it will help the lender asses your repayment capability and proof of regular income will ensure you qualify for the loan.
Click here to know more and apply for a business loan
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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