India is a young and one of the fastest growing countries in the world. With the plethora of business opportunities at disposal, business owners are accelerating their business to its full potential. They are also looking to expand the business. However, funds are an important requirement for business expansion, which many business owners often lack. So, to overcome this obstacle, a business owner can avail a loan for business.
With the advent of private banks, NBFCs, and online lenders, small business loans are readily available. A business loan is a credit which is especially availed for the sake of business from an NBFC or other lenders. The funds can be used to set-up a business, expand the business, or increase capital investment. The amount availed can be repaid in monthly instalments called EMIs.
Let’s take a look at the five crucial things that you need to know before availing a loan for business in India.
Need for Business Loan
Recently, domestic markets have witnessed development and growth. It has led to an upsurge for business expansion, which has increased the demand for business loans in India. Anyone who is in the business and needs financial help, can have access to formal credit in the form of a business loan. In a nutshell, business loans are quite easier to avail these days.
Use of Loan for Business
A business owner needs to keep up with the rapidly changing business trends to attain profits. For this, he needs to renovate his office from time to time, increase business cash flow, upgrade or buy new machinery, extend business to new cities, stock up inventories, hire more people, or take new operations. All these tasks require money, and this requirement can be met with a business loan.
Business Loan Requirements
All loan lenders who lend money expect gains from it. Thus, they have certain rules and requirements. However, if we see through a borrower’s perspective, he is scared of a lengthy loan application process. Therefore, he sticks to an NBFC. Nevertheless, NBFCs too have some requirements. These requirements include some essential personal and business documents.
Non-banking Financial Companies
When planning to avail a business loan, the business owner can consider availing it from an NBFC. Notably, NBFCs are FinTech Companies that have liberal policies for providing business loans. They are risk takers and offer unsecured business loans. They are flexible and faster than banks.
Loan Application
To avail a loan for business, the business owner needs to apply for it directly by visiting the lender’s office or online through their website/ mobile application. He also needs to provide the documents required by the lender. A general list of documents include:
- PAN
- Last one-year ITR
- Bank statement for nine months
- Office and residential address proofs
When applying for a business loan, the borrowers need to be cautious with the required documents. Also, he needs to fill the form correctly. Unlike banks, NBFCs have a hassle-free loan application process; they don’t have a tedious process.
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