What Is The Process Of A Business Loan Application?

When you think of starting a business or running an existing enterprise successfully, money is at the centre of it all, right? Even the most successful business can go through a rough period due to market conditions or several other factors. So, anytime you think you need financial help to keep your business floating and remain competitive in the market or even for expansion purposes, you can always rely on a business loan.

 

Today, many banks and NBFCs (Non-banking Financial Company) in India offer different kinds of business loans, and you can choose the right to suit your exact needs. Getting a business loan gives you the flexibility to use the funds in any way you deem fit and meet the business expenses; the lenders typically don’t have any restrictions on the end usage of the funds.

 

In addition, you can secure the business loan with or without any collateral, as there are unsecured business loans, too. With intense competition among the lenders in India, you can get the funds at the most affordable interest rates and extended repayment periods.

 

While applying for a business loan is easy, especially since most lenders now offer 100% digital service, you must know and follow the business loan process correctly to get the funds. So, in this guide, we discuss how to get a business loan.

 

Pre- application steps

 

Before you start approaching the lenders and filling out the application forms, there are a few important steps that you must take to ensure that you have the maximum chances of getting the loan approved and also get favourable terms and conditions.

 

For instance, if you have any outstanding dues, it would be better to repay a major chunk of it before you approach any bank or NBFC for more credit. Also, it is always wise to do a little research about the business loan procedure, the eligibility criteria, documents required, etc., and assess your needs to choose the best type of business loan.

 

Choose the right lender

 

Once you are sure about your financial needs, i.e., the amount you need and how you will use it, and have a replaying plan in place, research the different lenders in the market. In India, there are many financial institutions that offer business loans.

 

Check the eligibility requirements, look for the interest rate and other charges involved, loan approval time, documents required, etc., and then choose the right lender with simple eligibility and documentation requirements and an online application process.

 

If you need the funds immediately, it is better to apply for a business loan with a lending organisation like Udyog Plus that offers instant approval and same-day disbursement.

 

Check your credit score

 

Whether you apply for a business loan with a bank or NBFC, the lender will definitely consider your credit score as one of the key factors in deciding your eligibility. In short, the credit score directly impacts getting the loan sanctioned or disapproved.

 

If you have a poor credit score or don’t meet the minimum credit score requirement of the lender, the lender may approve the loan but charge a high interest rate, or they may outright reject your loan application. So, before you approach the lender, it would be a wise idea to check your credit score and then shortlist the lender accordingly, whichever has the minimum credit score requirement closest to your score.

 

This simple process can help you avoid a lot of hassle during the loan application and approval process and ensure that you get the loan at an affordable interest rate and favourable terms and conditions.

 

Prepare a business plan

 

Most lenders may require you to submit a detailed business plan along with the application form and other documents. This is a standard business loan process, especially if you are just starting your business or your venture is quite new.

 

The lenders need a business plan to know about the business potential and the financial projection and assess your repayment capacity. So, prepare a solid business plan showcasing how you plan to grow your business and how it has strong growth prospects financially.

 

Submit the application form

 

This is perhaps the most important part of the business application process. Whether you are applying online or at the branch, make sure that you treat this step with utmost care. Since the lender checks and verifies all the details you mention in the form, make sure to provide accurate details.

 

If you are filling out the form online, check all the details thoroughly a couple of times, at least before you finally submit it.

 

Keep the documents ready

 

After you submit the application form, the next step is submitting the necessary documents. It is an integral part of the business loan procedure. You must comply with the KYC (Know Your Customer) process and submit important documents like PAN card, identity proof, business existence proof, address proof of residence and business, bank account details, business income details, etc.

 

Check the documents required by the specific lender for the type of business loan you are applying for and keep them ready beforehand so that you don’t miss out on anything and avoid the last-minute hassle.

 

Evaluate the EMI

 

Another important aspect of the business loan process is knowing the exact EMI amount payable for the amount you want to borrow. You can use online tools like the business loan EMI calculator, which allows you to know the exact EMI payable based on the inputs you provide, like the loan amount, interest rate, and loan tenure.

 

You can adjust the loan amount and the tenure to know the EMI for the different amounts and different periods and make an informed borrowing decision accordingly. The EMI for the business loan must be affordable, and you must be able to repay the amount consistently throughout the loan tenure without compromising your other business goals.

 

Final Word

 

Every business is unique. So, as a business owner, you must decide which business loan option is best for your venture. Udyog Plus offers the best business loan at an affordable interest rate, starting from 8% per annum, and with minimal documentation, giving you a hassle-free borrowing experience.