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:
- Term loan
- Working capital loan
- Indutrial Equipment Financing
- Business Loans for women
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.