Here are the eligibility criteria that are common to most Banks & NBFC’S
|Borrower’s Age||The applicant must be 21years while applying and max to 65 years.|
|Business Vintage Proof||Min 1 Year (Profit).|
|Business Profile||Self-employed individuals, Proprietors, Private Ltd. Co, Partnership Firms involved in the business of manufacturing, trading or services.|
|Income||Enterprises making profit for the past two years and with a minimal annual income (ITR) of Rs. 2 Lakhs.|
|Loan Amount||Starting from Rs. 50,000 to Rs.1 Cr.|
|Interest Rates||Ranges from 9.10% to 36%.|
|Loan Tenure||12-60 months.|
|Processing Fee||Generally ranges from 1% to 3% of the loan amount + (GST).|
|Credit Score||700+ (subject to different bank policies).|
|Identity Proof||Aadhar card/ Passport/ Driving License/ Voters ID/ PAN card/ Passport size photos.|
|Residence Proof||Passport/ Any utility bills/ Aadhar Card/ Rent Agreement /Voter ID Card/ Ration Card /Driving License.|
|Bank Statement||Last 6 months to 1 year.|
|Income Documents||Copy of Income tax return of previous 2 years with balance sheet, profit and loss account, audited by CA.|
|Proof of Continuation||Shop Establishment Certificate (GUMASTA)/ Trade License/ Certificate Factory Registration Certificate/ GST Registration Certificate /Udyog Certificate Tin Number|
|Additional Documents||Computation of Income (CA Certified), Audited balance sheet Assets account Capital account Profit & loss account. |
Recent bank statement of 6 months.
PAN card requirement for Companies/Firm/Individuals.
If a loan is in progress then its entire statements.
Duly signed and filled business loan application by the applicant.
DO’S AND DON’TS OF BUSINESS LOAN
Here are some points of do’s and don’ts of business loan including what you should and shouldn’t do before applying for your loan and after receiving it.
|1.You should make your banking strong and healthy as much as you can. |
2.Before you go to a lender always do your research work and compare products from different lenders available in the market.
3.You should provide right documents at right place at the right time.
4.Before applying for business loan, it is essential to know your business cash flow- i.e. the combination of your business income and outgoings. This will boost profit and will help you to repay your EMIs timely.
5.Clear your dues on time. If you don’t repay your EMI’s on the given period of time, then your credit score could be at risk, which may impact directly to your loan application.
6. Make sure you have completed all documents formality before applying for loan.
- Don’t spend too much on things which are beyond to your limits. For example, you should only cover your general business purposes and therefore can’t be used for personal expenses.
2. Don’t put your assets at risk.
3. Don’t apply to multiple lenders at a time as it will badly affect affect your credit score.
4. Also don’t take more than one loan at a time as extending your debts can put your business at risk.
5. Do not be in a hurry to foreclose your loan as lenders also charge for foreclosure.
REASONS FOR REJECTION OF BUSINESS LOANS
Here are the common reasons behind the rejection of business loan application
- Poor Credit History- Your credit score shows a greater impact when it comes to availing business loan. The credit score directly reflects the creditworthiness of a businessman.
- Incomplete (false) Paperwork/Documentation– This is also one of the major reasons for rejection of business loan. To get approval for a business loan, an applicant must have to provide relevant information and legal documentation.
- Unhealthy (poor) Banking- The insufficient or inadequate bank balance may lead to failure of business. So, there are high chances of loan rejection. Thus, it is essential for each and every applicant to maintain higher banking (healthy transactions).
- Negative FI- Field Investigationreport can be negative due to the following factors(reasons)-
- Door found locked/ Address not found.
- Negative comments (review) about applicant.
- Bad reputation/goodwill.
- Poor Cash Flow/Insufficient Cash flow: This is another important factor which deeply affects approval of your loan application. Lenders analyze the cash flow of your business to determine your ability of repayment. If your cash flow is low then it would lead to rejection of your loan application.
- Lack of proper business plan: If you do not have a proper business plan, chances are you may also not be clear about how much fund you require and how are you going to use it? Therefore before you present yourself before a lender make sure you have worked on all these factors and are very clear about the funds.
- Know the Purpose of your Loan: So, do you want a loan to renovate your office, or purchase or upgrade a machinery, or buy some new technology, or expand your business, or develop a new product, make sure that you are clear about the purpose for which you want the funds. If you are not sure about the purpose of your loan, lenders will not be convinced with your proposal and chances are your application may get rejected.