What Financial Documents Are Required for A Business Loan in India?
A business, whether during its initial stages or not, is in need of funds to afford certain expenses and secure a place in the corporate world. In order to raise such funds, most businesses opt for help from business credit cards, relatives, and many more sources. Some entrepreneurs opt for a safer and more reliable source of raising finance through a business loan.
A business is often in need of funds in order to maintain an appropriate cash flow rate. They also try to acquire sufficient working capital to meet the various expenses of business activities and ensure profit-earning. A lot of activities, like purchasing inventory and advanced equipment, hiring efficient employees, and so much more, require a stable loan and a proper business loan interest rate.
One can also apply for a business loan by approaching traditional banks, non-banking financial institutions, crowdfunding, and also government corporations. There is no end to the number of institutions from which you can obtain these kinds of loans.
Benefits Of Business Loans
Opting for a business loan can provide you with a lot of financial benefits, which will prove to be advantageous for you in the long run. From getting surplus funds to getting to choose from a lot of options, you will not have to face any issues in the process.
1. Better Flexibility
There are a lot of options provided to business owners to apply for a business loan. One can choose from long-term to short-term loans, with different amounts and flexible interest rates. Your loan tenors can now be selected on the basis of your estimated calculations too. While short-term business loans go for a period of one-year, long-term loans offer the same benefits for a duration of five years or more.
2. Easy Management of Working Capital
After being eligible for a business loan, you can get your hands on funds that will allow you to fulfill your capital requirements and take your business down a more successful road. With the help of such a business loan, you will be liable to ensure smooth maintenance of cash flow. It will also serve as a boon in helping you ensure financial stability in the long run.
3. Low And Affordable Interest Rate
Financial corporations offer loans at a low business loan interest rate so as to ensure convenience for the borrowers. The rate of interest depends on your creditworthiness, the amount of loan borrowed, and the duration. Non-Banking Financial Corporations (NBFCs) provide loans after charging nominal processing fees. Apart from this, they tend to relieve the borrower from paying the prepayment penalty.
4. Loans Granted Free from Collateral
A business loan granted by alternating companies of finance like NBFCs is free from collateral. This is beneficial for small businesses as they can now avail funds and easily work towards success.
5. Flexible Options for Repayments
Such business loans, along with their convenient business loan interest rate, offer flexible repayment options for the benefit of the borrowers. This assures smooth and on-time repayment of loans, thus keeping the borrower’s interests in mind. They can now feel free to work out their repayment plans after discussing them with the lenders. Due to the loads of options to choose from while you apply for a business loan, you can also avail the facility of lowering or increasing EMI according to your rate of profits.
Documents Required for Acquiring Business Loan
To fulfill business loan eligibility and obtain approval from the lenders, one must submit a handful of documents that are bound to be carefully analysed.
1. Identity Proof
If you are opting for a business loan as an individual or firm, an appropriate identity proof (like a PAN card) is required.
2. Address Proof
A passport, voter ID card, ration card, or driving license will be required in such a case.
3. Bank Statements
For getting your business loan approved, proper bank statements will be asked for the last six months.
4. Proof of Continuation
Documents like the Sales Tax certificate, Trade license, ITR, or Establishment will be essential.
5. Income Statements
The latest ITR will be required. Your business’s computation of income, balance sheet, and the profit and loss account for the past two years will be demanded.
6. Other Documents Required
You will need to present your Sole Proprietorship Declaration, Certified Copy of the Partnership Deed, as well as a properly certified copy of the Memorandum and Articles of Association. The Board Resolution’s certified copy will also be needed.
Avail The Benefits of a Business Loan Today!
After providing all the documents needed to accelerate the process of business loans, the lenders will carefully examine them. If everything goes according to the listed plans and you become eligible for the loan, you will face no further hindrances in claiming it. All you have to do is make sure that everything goes smoothly and there are no problems from your side.