Checklist for Business Loans
Finance is the most crucial requirement for a business to expand. With the evolution of different companies, there has been a consequent evolution in Business Loans.
If you seek to apply for a Business Loan, there are a few things you need to remember. These include Business Loan interest rates, equated monthly instalments, types, etc.
Decide the type
There are different Loans to meet other requirements. Some of them are:
- Term Loan
- Loan Against Property
- Loan Against Investment
- Equipment Finance
- Working Capital Loan
- Bridge Loan
- Trade finance
- Invoice Discounting
- Purchase Order Financing
- Cash Credit Loans
- Overdraft Account
Before getting one, figure out which suits your requirements the best. Each one has its terms and repayment period. Depending on the business’s needs and requirements, these Loans gets customized. There are also Loans under different schemes by the Central and State Government for the SME sector.
Check eligibility
Before you apply, check the eligibility criteria for each type. Most lenders specify their eligibility criteria. Some of the common ones are:
- Minimum turnover limit
- Minimum monthly income for self-employed
- Minimum profit for the year
- Consistent profitability for specific years
- Applicant age
- Business operation location
Lenders usually specify these conditions on their websites. If you meet them, you can apply for the Loan without any concerns
Calculate EMIs
Lenders offer a Business Loan EMI calculator on their website that is free of cost. By using this, you find the monthly payout. It is essential to evaluate the EMI so that the business can budget for the additional cash flow. The EMI depends on the interest rates of the Business Loan and the tenure. By using the calculator, you can decide the term that suits the business cash flow.
Collect necessary documents
Before applying, collect all the required documents that the lender needs to process the Loan. This includes audited financials wherever available, KYC documents, and documents specific to the type of Business Loan availed of.
Apply for the Loan
Once you have ticked off all the mentioned points, you can finally apply for Business Loans. Depending on the eligibility criteria and the health of the business, the lender accepts or rejects the Loan application.