A commercial (Business) loan is a financial contribution that is taken to drive the business, as in exchange for this economical support the corporate agrees to repay with added interest over a period.
These kinds of loans will be secured or unsecured, for secured collateral is required, and private agreements need to be signed for the violation of payments for unsecured loans. Business loans can be used for startups, marketing, advertising, refinancing, inventory or equipment purchases, business expansion, franchising, and acquisitions.
How to apply for a Business loan?
- Select the correct form of loan that suits the business.
- Confirm with credit score and with minimal annual revenue to qualify for the loan.
- Choose the proper payment method to repay it comfortably with no issues.
- Decide how to collateralize the loan.
- Based on the requirements check whether the loan is to be taken from online lenders, banks, and nonprofit microlenders.
- Finalize the documents and apply for the loan.
How to Make certain to get a Business loan?
Some of the things that must confine in mind are listed below:
- Choosing the right lender from where to avail of the bank loan.
- Stop applying for multiple loans if having existing loans.
- Make bound to clear any EMIs before going to apply for the commercial loan.
- Try to acknowledge and apply for the loan amount which will be repaid on time.
- Have an assessed audited record of financial accounts.
- Ensure to enhance credit score and validate it at regular intervals.
Mandatory Documents for a business loan:
- Proof of identities like Passport, Pan card, Voter id, and Driving license.
- Residential address proof.
- Current bank account financial statement for the last 6 months.
- Documented evidence of continuity of business.
- IT Returns and statement of Computation of income for the past 2 to 3 years.
- Board Resolution.
- CA certified or Audited P/L account statement and for > 40 Lakhs cases Audit report together with P&L and Balance sheet schedules for last 2 years.
- Recent ITR of Co-Applicants for the last 2 years.
- Verified Ownership of residence or Office.
Business loans by Government:
Government offers a fine and reasonably economical backing to MSMEs (micro, small & medium enterprises) to encourage the existing commercial activities and to get expanded. Some of the schemes to reinforce the sector are given below.
- MSME Loan in 59 Minutes
- Pradhan Mantri MUDRA Yojana
- Credited Guarantee Fund Scheme for Micro and Small Enterprises
- National Small industries corporation
- Credit Linked Capital Subsidy Scheme