Starting your own business venture rates amongst one of the best feelings in the world. After all, you are your own boss and need not take orders from anyone. You are free to do things your way, as you like them and when you like them. But it also means that you have to shoulder most of the responsibility and it includes travelling far and wide places, working for odd hours and arranging for finance as and when required.
After a certain period of time, you will need funds from an external source due to reasons, such as delayed payments, purchase of new assets, or acquiring materials in bulk. Whatever be the reason, the matter of the fact is that you need money and you need it as soon as possible. There are some options for raising money from venture capitalists but that would mean giving up a portion of your ownership in the venture. Well, there is no need to resort to such options as you can go for an SME business loan to finance your funding requirements. There are various financial institutions that provide SME business loans to small business owners looking for an unsecured business loan in India for the various business-related requirement of theirs.
What are Business Loans and Where to Apply?
SME Business Loans are a financial product which is offered by most lenders in India. As the name suggests, business loans are meant to be used for business requirements only. Depending on the nature of the requirement and the amount required, business loans in India could be secured as well as unsecured. Out of the various financial institutions operating in India, online lending companies have now become a preferred option for small business owners to borrow money for their business requirements.
Online lending companies carry out all their operations through their online platforms, i.e. website and mobile App. Unsecured business loans from online lending companies usually come with a repayment tenor of up to 24 months and the rate of interest varies between 23% and 29%, depending on the lender. If your business has registered an annual turnover of Rs. 10 lakhs in the previous year, then you are eligible for business loan of up to Rs. 5 Lakhs with an option to foreclose the business loan without any penalty charges. Business Loans from online lending companies can be used for any business-related expenditure, such as the purchase of machinery, upgradation of infrastructure, payment of expenses, or any other business-related expense.
With the rapid influx of technology in the financing sector, it has become really convenient for business owners to apply for a business loan using online channels. You can visit the site of the particular lender you prefer and just need to upload the PDFs of various documents that they required. They only take a few working days to process your application.
Tips to Improve Eligibility for Business Loan
Nowadays, many financial institutions have started following a stringent screening criterion to determine your eligibility for an unsecured business loan. In wake of such developments, it is important that you follow the below mentioned tips to enhance your eligibility for an unsecured business loan:
Ensure a CIBIL Score of over 700: Your CIBIL score plays a very important role in helping the lenders determine your financial ability. You must ensure that when you apply for an unsecured business loan, your CIBIL score is over 700 as it would significantly enhance the chances of your application being approved and also help you get the lowest possible interest rates and maximum repayment tenor.
Create an Emergency Fund: You must maintain an emergency fund wherein you put 5% of your monthly revenues in it. This can help you take care of margin money requirements as well as help you pay your EMIs during tough times.
Pay your Taxes and EMIs on Time: You must pay your taxes and EMIs on time. This shows your responsible behaviour to the lenders and enhances your eligibility for the business loan.
Maintain a Healthy Balance in your Bank: Make sure that you maintain a healthy balance in your bank account (current and savings) to show your financial stability to the lenders.
Keep Documents Handy: You must always keep the financial documents handy so that whenever the lender asks for one, you can provide the same at earliest and ensure speedy processing of the application.
These tips can go a long way in improving your eligibility for business loan and help you get access to the required funds to meet your liabilities in a timely manner.