How to Apply for a Business Loan Detailed Information

How to Apply for a Business Loan Detailed Information

Many times in life such work comes when money is very much needed. By the way, money is always needed. But whenever there is a matter of business, the first requirement is money. By the way, the first requirement for business is an idea that solves the problems of the people. Money is needed to get this idea off the ground.

Business Loan

Money is one such thing which is always needed. Sometimes for running a household, sometimes for something new like business or buying a new house or building a new house. In such a time, one has to resort to a relative friend or bank. Bank loan is better than relative and friend. When there is no support from here also, then the user has to take support. The user is eagerly waiting for this time.

Here we are going to talk about how can I get a business loan? Where to get a business loan? Some people join the investor with Startup Idea and in many films you may have seen that the investor cleverly understands the project and will talk to the front with terms and condition which is not possible. A man who met Investor with Startup Idea does not even know and the capitalist starts working with his idea and whose idea he is still searching for the investor. That is why start your business right on a small scale before finding an investor.

If you do not have any investment option, then apply for a bank loan because it is the easiest. Although a bank loan is not available very easily, but if done properly, the bank loan will definitely be available. Maybe some bank will reject your loan application, but do not worry. If you meet the bank officer with all the documents in the right direction, your loan will definitely pass.

What is Business Loan ?

Business loan is also called commercial loan. For Business Expand or New Business Startup when investment is required. If you do not have investment, then bank loan is the first option. There are many companies and banks that do business loans. If one million rupees is needed to start a new business and an investor asks to invest 50% of the money invested in it. Just think that someone just and only invested money and becomes a shareholder of half for a lifetime. With this, the startup owner has to face the loss.

In such a situation, the best option is a bank loan or some NBFC companies that you can talk to. It is human nature that he always wants to talk about his benefits. In such a situation, the investor also wants to keep the maximum share of the company himself, seeing the benefit of himself. If you want to avoid such situation then business loan is the best way. For business loans, start trading on a very small scale first.

Also Read : What is CIBIL Score and How to Check Your CIBIL Score

Business Loan Types

Business loan is of two types. Documents have to be prepared according to the Business Loan Type. Business Loan always depend on Business Plan. Business plan decides how much loan you should get?

  1. New Business Loan: There is very less loan for new business because at the start of the company, any bank is afraid to give loan. Because the bank always decides whether the loan given today will be refunded with interest in the coming time or not? Business plan should be very good for taking loan on new business. Good here means a business plan in which the benefit of the company is visible. If the benefit of the company is not seen, then how will the bank loan be repaid along with interest. The bank always tries to get its money with interest on time, for this the company must have profit.
  2. Business Extension Loan: This loan is given to grow to grow an old business further. This loan amount can also be very high. Because, here the company is working first, if the company has a good relationship with the bank then it gets the loan very easily.

Business Loan Approval Tips

You can take the help of a CA (Charted Accountant) or Financial Advisor to apply a business loan. Some important information must be collected before taking any loan.

  • What will be the loan EMI? The lower the EMI, the better. This makes repaying the loan easy. But, if the budget is there, you can deposit EMI more than Amount.
  • The Bank takes a Loan Processing Fee to approve the loan. It must be known. Many times too much money is taken in the name of Processing Fee.
  • Contact Direct Bank for any loan. Broker can waste both time and money.
  • Check the online and offline review of the bank from whom you are taking a loan.
  • Always choose a loan with a low EMI.

If the entire loan amount is returned to the bank ahead of time, what will be the Prepayment Charges? Sometimes it happens that we take a loan for 20 years but, in 10 years, we return it. In this case, how long will the interest be paid?

Documents Required for Business Loan

  • Address Proof (Aadhaar Card, Driving License).
  • Bank Account with last six-month Transactions.
  • Business plan in which when and how the company will get the profit, it must be written. Because the bank decides the same before giving loan.
  • Company Letter Head and Legal Documents
  • Income Tax Return Last 3 Years
  • Balance Sheet
  • Last 3 years Income Tax Return of Applicant (Business Owner)

Apply for Business Loan

  • ICICI Bank
  • HDFC Bank
  • Axis Bank
  • SBI
  • Bajaj finserv
  • Standard Chartered Bank
  • RBL Bank
  • Punjab National Bank

Apart from this, you can also contact Paisabazar.com, there are many banks in their panel. There is some other company that gives loan consultancy. Consultation can be obtained from such company. Many times it gets fraudulent with the customer in the name of processing fee. Newspaper classified Ads and below the metro station is also the number of many loan company take all information before taking loan from such company. Such a company often loots in the name of Processing Fee.

Business Loan Interest Rate

Business Loan Interest Rate of different bank is different. Along with this, the processing fee of all banks is also different. All banks have different time limits for returning the loan amount along with interest.

Updated April 2018

Bank/NBFC Interest Rate Range Processing Fee Range Max. Loan Amount Tenure Range
BAJAJ FINSERV 16% – 21% Up to 2% ₹ 30 Lakh 1-4 years
CAPITAL FIRST 13% – 20% Up to 2% ₹ 75 Lakh 0.5-3 years
HDFC BANK 10.99% to 20.75% Up to 2.50% ₹ 40 Lakh 1-5 years
ICICI BANK 12.9% – 16.65% Up to 2% ₹ 1 Crore 1-5 Years
KOTAK MAHINDRA BANK 16.00 % to 19.99% Up to 2% ₹ 75 Lakh 1-3 years
STANDARD CHARTERED BANK 13.5% – 20% Up to 2% ₹ 75 Lakh 1-5 years

Interest chart credit – financebuddha.com and bankbazar.com

A separate tax has to be paid on the processing Fee as well. Business Loan Interest rate depends on many things.

  • Credit score
  • Business age
  • Monthly Revenue
  • Collateral

Now the government has also made the business loan process easier. Very few banks offer new business loans. Whereas almost all banks give loans for business extension. Some important work should be done before going to the bank, which will make it easy to get a loan.

Go to the bank with a written business plan. Loan Amount depends on the business plan.
All bank’s terms and conditions are different. In such a situation, collect online information about the bank from whom you want to take a loan.

Keep Documentation Complete. Business FD requires some FD (Fixed Deposit) or Guarantee deposit.Whether or not to give a bank loan after Document Submission is entirely up to the bank.

Hopefully, you have got information about Business Loan. If there are any questions related to this, then you can ask in the comment box below.

Conclusion

Documentation is required for any loan. Business loan depends on Business Idea, Business Plan and ROI (Return on Investment). Visit the bank with all the necessary documents, hope your loan will be approved. Submit a Business Plan to the Department of Industries for the New Business Loan. For the new business, it is easy to get loan from the industry department.

Author: Himanshu Meena

Motivated Blogger !!! Exploring Opportunities Everywhere !!!

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