Business loan is a form of loan that is speciallydesigned to meet the requirements of a business owner. For a business to grow, it is important that investment in the form of money, time and efforts is made from time to time.
Posted 3 years ago in Other.
Business loan is a form of loan that is speciallydesigned to meet the requirements of a business owner. For a business to grow, it is important that investment in the form of money, time and efforts is made from time to time. It is not possible for a business owner to invest money again and again. Either he will have to sell his property or spend all his life savings into it. However, with the advances in the financial industry, there are a number of banks and financial institutions that offer loans for a business.
Banks and financial institutions offer business loans at low and lucrative interest rates. The loans have consumer friendly terms and are easy to repay. Lenders follow a transparent process of application and approval.
• Eligible applicants include individuals, public company, private company or proprietorship.
• The applicant should have completed at least three years in the business and the business should be profitable as per industry norms.
• Holding a positive credit history helps in a quick loan approval.
Documentation for the application includes identity proof, address proof, signature verification, photographs, audited financial statements and pro forma income statement and balance sheet of the business. It is advisable for the borrower to scout the market and compare business loans interest rate. This will help ensure that you are getting the best loan offer. Your loan amount will depend on the profit and the years of business. There are additional factors like the cash flow and the ability to generate revenues. Based on the pro forma information you provide to the lender, they will make a decision on the loan amount. The key criteria are the profitability of the business and your ability to pay the installments on time. The lenders take a good look at your cash flow in order to determine your ability to manage the monthly installments while meeting the other liabilities of your company.
Current business loans interest rate range from 15 percent to 29 percent. There will beadditional charges which include processing fees and prepayment charges. You can use the EMI calculator to determine the amount of installment you will have to pay every month in order to meet the loan requirements. All you need to do is provide information about the loan amount and the tenure, the calculator will use the interest rate and help you determine an estimate on your monthly outgoing. If you miss out on a payment or continue to default, your credit score will fall down. This can have a negative impact on your loan applications in the future. Consider your ability to pay the monthly installments before you apply for a loan. Business loans are available for a long tenure and have a hassle free application process. This is the main reason the loan is preferred by every size and type of business. Businesses can significantly benefit from the loan if they manage topay the EMI on time.