Planning to start your own venture? Have that million-dollar idea that just needs proper financial backing to become a viable business? Then a business start-up loan can be just what you need. But are you eligible for one? We guide you on how to obtain a small business loan.
India today has become a hub of start-ups; be it a college dropout or a 50-year-old veteran, everyone today dreams of starting their own venture. And with easy financial assistance—such as options of start-up business loans or working capital business loan—turning a proposition into a business is no longer a troublesome affair. But it is important to understand and take into account the factors that will decide the eligibility of getting the loan. Below are few points on how to get small business loan:
Maintain a good credit score
Small business loans are usually given to individuals for starting, running, or expanding a small business. But getting the desired amount of money, from financial institutions, hinge majorly on your capability of paying it back with the interest. One of the deciding factors of your financial competence is your credit score. Having a good credit score directly affects your chances of getting a loan and also helps the lender decide your credit-worthiness. Lenders will specifically check the record of your current or previous loans to decide your credibility. And a timely payment of loans will increase your credit score.
Design a comprehensive budget
Your eligibility also depends on the amount of money you are asking for compared to the type of business you want to start. Overestimating or underestimating the loan amount can jeopardise your chances of getting the loan. So devise a well thought out and reasonable budget with attainable future projections.
Have a sound business plan
One of the thumb rules of how to get a small business loan is to have a detailed business plan, since a lender primarily gives the loan based on the proposal. A thorough business plan helps lenders understand how the loan money will be spent and also estimate your repaying capabilities. Without a business plan you are not eligible for a loan. Hence, you should put concerted efforts in creating a strong business plan that will highlight your company, the services/products, target market, cash flow, expected financial returns, etc. The plan should demonstrate a profitable and sound business model.
To meet the eligibility criteria of business loans it is essential to have all the required documents. You have to produce or attach your financial documents such as bank statements, tax returns, balance sheets, business vintage, etc. along with personal information. These documents form the foundation of your eligibility, and without them securing a business loan will be impossible.
Before selecting a lender, remember that it is a must to carry out an extensive market research. Make a point to check the current business loan rates along with the benefits that you are entitled to. Small business loans can help translate your visions into a reality without being a financial burden. Bajaj Finserv is a good option for availing hassle-free business loans up to Rs 30 lakh. No collateral or guarantors required, no hidden costs, and flexible loans to fit your need.