All You Need to Know About TDI Loans for Small Business
Getting a business loan from a bank or a non-banking financial company (NBFC) can help a company start up or grow if it doesn’t have enough money to do so on its own. Most business loans have interest rates based on how much money was borrowed and the amount of time given to repay the loan.
In India’s startup scene, small and medium-sized businesses still go to banks for loans.
Your small business can grow with the help of a business loan. The money from your business loan can be used for anything you want. For example, to buy new equipment, hire more people, pay for advertising, etc. With bank loans, your business can keep going. Take advantage of opportunities for market growth.
About 40% of India’s GDP comes from its small and medium enterprises (SME) sector, which comprises small businesses. Even though this is a big source of jobs in India, there is a lot of competition from privately funded businesses in this area. As a result, the Indian government has set up several loan programmes for micro and small businesses. These loans can be used for many things by small and medium-sized businesses (SMEs). They help people run and grow their businesses, buy new equipment, and so on.
What is a Loan for a Business?
A business loan is a sum of money that a company borrows from a bank or other lender to help the business grow. This money helps businesses meet their immediate needs for growth and expansion.
Eligibility criteria for a business loan
Whether or not a company can get a loan will depend on the following:
How old is your company?
Financial institutions like banks care a lot about how long a company has been in business. For a small business loan online or a business loan from a traditional bank, you usually need to have been in business for at least two years.
Credit score
In India, one of the three major credit bureaus will give business owners a free credit report once a year. This is a very important requirement for getting a business loan because it shows the lender that you can pay back the money on time.
Getting taxes done
Before applying for a business loan, the borrower should have filed income tax returns for the past two years. Along with other paperwork, you need to send in the ITR forms. This includes proof that you own the business and bank statements.
How to Choose the Right Business Loan
Lenders or banks usually ask why a business needs a loan. Lending institutions often want to see that a business has enough cash flow. Because of this, it might be hard for startups to find investors.
In the beginning, business credit cards and personal loans may be the only ways for some startups to get the money they need.
In this situation, a line of credit can be an attractive way for a business to get money, making it easy to get cash when needed. In this manner, a business can meet its financial obligations—whether they are regular costs like payroll or unexpected ones like repairs, maintenance, etc.
There are different ways to get money for a business that is just starting or growing.
1. Required Paperwork
Forms that are not properly completed will not be accepted.
2. Documents for KYC
- Articles of Association
- Certificates of Shops and Establishments
- Certificates of Incorporation
- Partnership Agreement,
- Incorporation Papers (AOA)
3. Account number that won’t change
- The business’s partners’, directors’, owners’, and promoters’ finances
- Sales predictions and results so far this year
- Financial statements (including audited and pro forma versions), VAT returns, audited financial statements, and so on
- Proof of the company’s registered office address on behalf of its directors, promoters, partners, or owners
- Statements from the last six months
- Photos: A photo of the applicant(s) and any co-applicants that is the size of a passport
How to apply for a business loan?
Getting a small business loan from the government is relatively easy. You can get a loan directly from a bank or credit union, which is how the government gives out most loans. Visit the branch of a bank or other financial institution that is most convenient for you to get help applying for a loan.
Some banks have online apps you can use to apply for loans for your business. You can apply by going to their websites, filling out the online form, and uploading any additional materials required. The bank verifies your information after you have completed the forms. If everything is verified as correct, the loan amount will be deposited into the bank account you provided when you applied.
Final Words
Companies should check their credit scores often, especially when they want to borrow money. Checking the business’s credit report is a good idea before applying for a loan. The owner must fix any errors as soon as they are found.
Piramal Finance is an Indian financial services company making its foray into retail lending, including personal loans, business loans, housing loans, and other consumer-focused finance products.
FAQ
- How large a loan can I expect to get in India for my business?
Small and medium-sized businesses (SMEs) and startups can get business loans of up to Rs 2 crore. This depends on the borrower’s qualifications, the lender’s terms, the borrower’s credit history, and other factors.
2. How likely is it that I’ll be able to get money to start my business in India?
In India, entrepreneurs can get loans from the government through a wide range of programmes. The Mudra Loan Scheme is a popular choice as it has many benefits for borrowers, such as lower interest rates.