If business expansion is on your card, then the very first thing you will look for is ‘Money’. Without sound financial resources, you can never be able to take your business to a new level. Even to start a new venture, you need substantial volume of money. Money arrangement or business funding can be done in any of two ways – investing proprietor’s funds or equity and business loans.
Nowadays it has become quite easy to source business loans as a myriad of lenders has come forward with their financial offerings for the entrepreneurs. Before you take out business loan, it is important to have valuable insight into the details as to eligibility criteria, interest rate, repayment terms and how the loan works etc. Also you must not forget that the lenders will verify the details provided by you. However, this verification job is entrusted to a third party to facilitate easier and faster loan processing. Let us now have a hard look at the rules and regulations as followed by a lending house to grant business loans to the applicants.
Criteria to Get Business Loan
Every lender you approach for business loan will always want to scrutinize your business plan. It is quite logical on part of the lenders because they want to be sure that you have a potential business plan which – if gets translated into reality – will fetch enough money to pay them back. So, your application and business plan must end on an impressive note. Some of the vital rules to follow have been enlisted below:
• Your business plan must project a concrete idea and should be explanatory enough to drive the nail home why you are seeking for merchant loans.
• Submitting a cash flow statement is a must. It is because the lenders want to look into the status of cash flow at the initial stage of your business. Poor cash flow is a real turn-off for the lenders. So, prepare a statement that is risk free and can impress the lenders easily.
• If it is not a start-up business, then attach some vital details regarding balance sheet for the last 3-5 years, statement for profit and loss and such other important documents to make your point stronger.
• A credit report is often a mandatory requirement to get business loans. In that case, a credit report from CRISIL or ICRA or any other approved rating agencies will enhance your chance of getting business loan.
Requisite Documents to Get Business Loan
Requirements vary from one lending house to another but the basic requirements are common to most of them. You need to provide business address proof, PAN card or VAT registration number. All these details will be verified to be sure of your authenticity. If you are the sole proprietor of the business, then driving license along with PAN card too need to be submitted. The bank may also ask for your profit and loss statement of the previous 2-3 years to check if your company has registered benignly sustained growth during those years.