Steps to Apply for a Small Business Loan in India

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Small and medium businesses are an important part of the Indian economy. These businesses not only generate income for the economy but also generate employment opportunities and increase GDP growth. The government has taken several steps to help increase the growth of small businesses in the country. Financial institutions offer small business loan in India at low interest rate and flexible repayment tenure.

In order to apply for the loan, you need to identify the purpose of borrowing. It will help decide on the loan amount. Once you know the amount you need, you should start to look for reliable lenders in the industry. Different lenders have varying eligibility criteria that you need to be aware of before applying for a loan. Compare the eligibility criteria online and then make a borrowing decision. You can make an online loan application and submit the necessary documents. You no longer need to visit the physical branch of different lenders. Few lenders have a minimum turnover requirement you need to adhere to. The applicant should be engaged in the business for a minimum period of three years and it should be a profit making business. Self-employed professionals, partnership firms, proprietors, and private companies can apply for the loan.

Once you shortlist on a lender, you can make an online loan application by filling up the application form and submitting the documents. You will have to provide proof of business, that is, Memorandum of Association, Articles of Association, KYC of the partners, registration of the business, PAN Card of the company, identity proof, address proof, ITR of the business, bank statement for the last 6 months, and proof of continuation of the business. You will also have to provide a copy of your passport-sized photographs. Some lenders also require an audited income statement and balance sheet and projected income statement and balance sheet. If the lender requires additional documents, you will be informed about the same. If you have a good credit score, your loan application will be approved in no time.

The best feature of a small business loan in India is that there is no need for collateral. You do not need to hypothecate an asset to get access to funds. You can apply for the loan even if you do not have any assets under your name. You can use the funds for any purpose in the business. There are no restrictions with regard to the end-use of the funds. The lender will not ask you why you need funds and where do you intend to use them. The loan has a high amount and flexible repayment tenure. You can repay the loan in EMIs over the tenure. Choose a lender that offers the loan at low interest rate, it will reduce the EMI amount and will keep your outflows in control. Prepare a repayment schedule to ensure timely payment of the EMIs. It will help build a strong credit score and will make it easier for you to get loan approval in the future.

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