Business Loan Process

A Step By Step Guide for Online Business Loan Process

June 29, 2022 • 10776 views

Presently, a Business Loan has become one of the most cost-effective solutions for a venture to stay afloat and grow. You can use business finance to expand your organization, upgrade your infrastructure, and even launch a new product. Any entity can apply for a Business Loan easily. Unlike traditional financing, lenders today have made a Business Loan more broadly available, especially for small businesses. This blog will help you learn everything about the Business Loan process.

Step-by-Step Business Loan Application Process Explained

The below points will help you understand the different steps of a Business Loan application:
1. Understand the Different Types of loans 
Stringent eligibility criteria and lengthy waiting periods are the two factors you should consider while applying for a Business Loan. This creates misconceptions regarding how to get a Business Loan. 
However, obtaining business credit today is quite simple, with a range of options to select from. From business expansion to equipment financing, you may choose the suitable form of loan for your financial needs. 
2.    Prepare Important Paperwork
Document verification is one of the most critical processes in the Business Loan application process. In recent years, the verification process for a Business Loan has become much more lenient. Many lenders now offer online verification services that you can use from anywhere. You will only have to upload the required documents in the desired format. 
Since the paperwork requirements in the Business Loan procedure vary by lender and loan type, you should always check with the lending institution before proceeding. Make sure that all the documents are attested and audited. Any incorrect papers will result in delays.
3.    Use a Loan Calculator
Filling out the exact loan amount that you can afford to borrow is a simple way to get your loan request approved. Many lenders provide free online Business Loan EMI calculator. You can use it to understand how much you can afford. Lenders mostly evaluate creditworthiness based on your income; thus, monthly income should ideally balance the sum.
4.    Be Cautious of Certain Factors
Loan acceptance is usually the most time-consuming of the several processes in a Business Loan application. While there are ways to expedite the approval process, most of them are ineffective. 
 Loan approval is always done on an individual basis, regardless of how well you prepare the appropriate documents. As a result, what works for one borrower may not be suitable for you.

ALSO READ :- Everything You Should Know About Business Loans in India…!

Different Types of Business Loan

There are different types of business loans that you can apply for. Thus, the below list represents the different types of business loans available in India:

Navigating the Application Processing Phase

There are various factors that affect the processing time of your loan application. These include:
1.    Type of Loan 
Applying for a working capital loan makes no sense if you merely need the money to finance inventory purchases. Therefore, you should always choose a loan type that suits you and your company's demands. You can also get a competitive Business Loan interest rate if you get the correct form of a loan.
2.    Business Plan 
Be honest about your company's financial health, with no omissions or additions. Also, explain how you plan to utilize the borrowed funds to win the lender's trust. To make financial estimates, you can use a Business Loan EMI calculator. A proper business plan backed by your good credit history will boost the chances of your loan approval.
3.    Credit Score 
You must have a minimum CIBIL score of 700 to get your loan request approved. Lenders use your credit score to determine your Business Loan eligibility. If your score is high, you will have to first improve it to get favorable loan terms.

Best Practices for a Smooth Business Loan Process

The time it takes for a Business Loan process from application to disbursement is usually 3-4 days, depending on how well you filled out the application form. In some situations, lenders may postpone or refuse a loan if they discover inaccurate information or a missing data field. You must apply carefully as a loan application form collects crucial information about the borrower. Otherwise, you may have to start all over with the Business Loan application process.

Benefits of Taking a Business Loan 

Business Loan can help you and your venture enjoy various advantages. You can learn about those advantages below:

  • Instant access to funds to meet the needs, mostly without the need for collateral.
  • A simple and quick application process.
  • Tools like a Business Loan calculator and a GST calculator enable you to estimate your EMIs easily.
  • Keep enough funds to cover any temporary gaps.
  • Establish a positive credit history by making repayments on time.
  • Business financing gives you tax benefits. You can write off the interest paid on your loan as a business expense to get tax deductions and lower your overall tax bill.

Key Factors in the Business Loan Approval Process

Below are the three key factors that lenders consider for a Business Loan approval process:
1.    Creditworthiness
Lenders consider your credit score and credit history as the primary factor before approving your Business Loan. A good credit score represents your creditworthiness and allows you to get loans at favorable terms. A minimum credit score of 700 is required to get a Business Loan. 
2.    Financial Stability 
Before approving your loan application, lenders always check the financial statements of your business. This helps them to understand if your business is good enough to generate the required amount for repayment. If your business finances are good and stable, then there's a high chance of your Business Loan getting approved.
3.    Collateral
Collaterals improve your chances of getting the loan request approved, significantly. Sometimes lenders may ask for collateral to secure the loan. It serves as a security for the lender to avoid any future loss. However, getting a Business Loan against collateral will help you get favorable terms as it is a form of secured loan.

How to Apply for a Business Loan?

You can follow the below steps to apply for a hassle-free Business Loan at Poonawalla Fincorp:

  • Step 1: Find and click on the ‘Apply Now’ button available on your screen’s right top corner.
  • Step 2: Complete your online loan application form by filling in your name, monthly income, phone number, PAN number, etc. 
  • Step 3: Upload the documents required like a Bank Statement, Business Pan, etc., and click on the ‘Submit’ button. 

If you meet the lender’s eligibility criteria, your Business Loan request will be approved, and funds will get disbursed.

To Conclude

The Business Loan process is simple, helping you generate capital and grow your venture. You can calculate the monthly instalments using an online EMI calculator. Apply for a Business Loan with favorable terms at Poonawalla Fincorp. Get a loan up to ?50 Lakh and take your business to the next level.

Frequently Asked Questions About Business Loan Process

  • What are the four stages of the loan process?

As a customer, you need to follow the four stages of the loan process: 
1.    Research & Apply: Understand different types of loans and how to apply. .
2.    Check Eligibility: Make use of a loan calculator to check the eligibility criteria.
3.    Documentation: Prepare the required documents.
4.    Submitting the Loan Application: Fill out your details and upload the documents at the time of submitting the loan application.

  • How to process an online loan?

To process an online loan, you need to follow these steps: 
1.    Visit the lender’s website and fill out the application form.
2.    Enter your details and upload the relevant documents.
3.    Wait for the verification of the lender.
4.    Post successful verification and approval, authorize the loan disbursal.
5.    The loan amount will be disbursed into your bank account after your authorization is confirmed.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Business Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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