What Lenders Are Looking For In Business Owners? Crack Your Business Loan Application

As an entrepreneur looking out to start a new business or expand your existing enterprise, taking a business loan is often unavoidable. After doing your preliminary research and narrowing down companies you’d like to take a loan from, nailing your business loan application is a must. If you’re wondering how to crack your business loan application, we have a few suggestions. With these simple must-dos, you’re sure to make your application appealing, thus ensuring that your application makes the cut.

Business Profile

The first thing to consider when you apply for a business loan is creating a short profile of your business. Tell your lender what the business is about. Give a gist of the operations you carry out, an overview of your clientele and your employees. Offering a brief about your business finances may also help your application. If your company has a strong financial background and you’re looking to expand further, your finances will earn your brownie points. In addition to your company’s philosophy and history, mention the loan amount you’re seeking and what use you want it to be put to. Adding this as a cover letter to your application will force the lender to review your application. Since this is the first interaction you’re having with the lender, make sure your profile sounds confident and compelling.

Your Credit Score

It’s a well-known fact that a lender is going to go through your financial statements and analyse your credit score before offering you a loan. As credit history can vary with respect to the field of your business, a lender may look into your personal credit history. Thus, it is important to keep in mind that not only is your business under scrutiny, but so are you. If you’re just starting out, a lender will definitely look into your (and your partner’s) credit history so as to gain a sense of your financial status. If you have successfully upheld financial obligations in the past, you are more likely to be sanctioned a loan.

Also Read : The Fundamentals Of Your Business Credit Score

Your Company’s Revenue

Before lending money, the lender has to make sure you can repay the sum at the end of the tenure. In order to do so, the lender may look at your profit and loss account in order to analyse your revenue. If your company seems to have enough revenue and a healthy financial state, there are more chances of your loan application getting approved. If you’re looking for a loan to start a business, the lender may have a look at your personal finances and other sources of revenue, if any.

Collaterals and Guarantors

Most lenders look for a security against your loan. Thus, mentioning assets you own that you may pledge as collateral to your loan can help boost your business loan application. This adds a sense of security in the minds of the lender thus increasing your chances further. While most lenders do ask for collaterals and guarantors, Bajaj Finserv’s business loan doesn’t need either. So if you do not want to offer any collateral or do not have a guarantor, research business loans from lenders that do not require them.

Your Business Savings

It is always a good idea to show lenders the money you’ve set aside. It may be savings in the books of the business or in your personal records. This shows that not only are you serious about investing in the business, but you’re also financially sound and safe. Showing savings makes the lender believe that you manage your finances well and thus have a greater probability of repaying the loan. It thus plays an active role in getting your business loan application approved.

Gone are the days of visiting a bank or physically going to a bank or financial institution to apply for a loan. You can now complete and send in your business loan application online. If you’re looking for online loans to expand business or start a venture, you are sure to find solutions to your problems with Bajaj Finserv. With an easy application process and a quick review process, Bajaj Finserv provides you with the convenience of applying for a business loan just with the press of a few clicks.

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Tips for Refinancing Home Loan

Tips for Refinancing your Home Loan

Despite what you think, there are some great ways to save money when you’re paying a Home Loan. You can find a lower interest rate or switch from a fixed rate to a variable rate or vice versa. You may also want to consolidate your debt, so that you reduce the overall interest you’re paying, for which you can use the Bajaj Finserv Online Debt Consolidator Calculator.

One optimal way to save more money when you’re paying your debt is to refinance your Home Loan. There are a few tips you can follow to make the process easier.

But before you go into the whys and wherefores of refinancing Home Loans, you need to know what refinancing a Home Loan actually means. Refinancing a loan is basically replacing your existing loan with a new one. This is done because the new loan will have different terms and conditions – ones that are more beneficial to you.

Know When to Refinance Your Home Loan

Let’s say you’ve taken a Home Loan after lots of deliberation and you got it fast and at a good rate of interest, too, because you used something like the Bajaj Finserv online Home Loan application. But then you realise that the interest rates have fallen, and you can’t capitalise it as you have chosen a fixed interest rate. If you’re in such a situation, then it’s a good idea to refinance your Home Loan. You’ll be able to reduce your interest rate and even change to a variable interest rate if you’re sure that the rates will continue to drop.

Apart from this, the following are some more instances when you can refinance your Home Loan:

  • When you plan to sell your home before the tenure of the original Home Loan ends.
  • When you want to reduce your monthly EMI payments. This can be done by extending the tenure of the new loan. For example, you prepay your loan early, say, five years before the tenure ends. Then you refinance the loan for the remaining principal amount for 15 years. Using the Bajaj Finserv Home Loan Part Prepayment Calculator can help you make the necessary calculations before you go in for something like this.

Learn How to Identify High Mortgage Charges

If there is only a nominal difference between the interest rates of your previous loan and new loan, you might end up paying more than you were with your previous loan. This usually happens when you mortgage assets with your refinancing lender and are required to pay heavy mortgage fees.

Choose the Right Lender

When you’re looking to refinance your Home Loan, don’t blindly choose the first lender you come across. Shop around a little to make sure you find a lender who offers you the best benefits. Most important of all, your lender shouldn’t levy high prepayment penalties on you.

Stay in the Know

When you’re planning on refinancing a loan, you need to keep your eyes open. Watch the market, keep track of interest rates, make all the calculations that you need to, and figure out exactly how much you will be saving. You should also research the new loan that you’re planning on taking, so that you will know how much you need to pay every month once you refinance your loan. An online Home Loan EMI Calculator will help you do this.

And how often should you refinance your Home Loan? As often as you need to keep saving money! When you have a Home Loan provider that makes the job easy for you, you don’t need to stop for as long as interest rates continue to fall. All you have to do is maintain a firm grip on market trends and interest rate forecasts to make sure you don’t have to pay any additional costs.

Transfer your Home Loan Online Home Loan Balance Transfer Calculator

A Comprehensive Guide to Loan Syndication in India

You’re definitely familiar with how normal loans work. There are important distinctions between the different types of loans like home loans, gold loans, personal loans, and credit cards. But, all these variants of loan have one important thing in common; they are all usually bilateral loans. This means that the loan agreement is between one lender and one borrower.

What is Loan Syndication?

When a borrower requires a huge amount of money, it is possible for them to apply for a syndicated loan. In this type of loan, many banks come together to fund one borrowing party. The collection of banks providing the loan is called a syndicate.

Why Go the Syndication Route?

When you approach a bank for a home loan, they would first assess the risk by appraising the property and your financial history. They also have a cap on the amount they can lend you, based on the value of the property.

In the same way, lenders have limits on how much money they can lend to one borrower. If the amount that the borrower is asking for is too high, it might breach this limit and the bank would be unable to approve the application. Loan syndication becomes a viable option in this case.

If you’re in the market for a home, you can apply for a normal bilateral Home Loan from Bajaj Finserv with low rates of interest.

Banks also benefit from syndication because the loan amount is divided amongst all the banks involved and each of the lender takes on less risk. This is important because of the huge sums involved in syndicated loans.

The Various Players

The role of the borrower is self-explanatory. They are the party that approaches a bank with the request for a syndicated loan. If you’re a borrower for a normal bilateral loan, Bajaj Finserv offers 5-minute online Personal Loan approvals! Simply click here to apply.

The arranger is the bank that the borrower first approaches. They communicate with the other lenders and set up the syndicate.

The co-arrangers are the first group of banks to agree to syndication.

The co-lenders are the various institutions that contribute towards the loan amount.

Since someone needs to look after the day-to-day running of the loan, an agent is appointed. They work for the lenders, but are paid for by the borrower. The agent’s job is to ensure that the borrower complies with all the terms and conditions of the loan agreement.

Stages of Loan Syndication

When the borrower requires funds, they approach a bank that can act as the arranger. The borrower needs to give the arranger a letter (called the mandate letter) that contains all the necessary details and commitments.

Once this is done, both the lender and the borrower will produce and send an information memorandum to other potential lenders. This document contains all the information about the syndication proposal and the borrower, including details about the project being funded.

Once the formalities are completed and the banks have formed a syndicate, all that is left to do is appraise the project, which is usually undertaken by an appraisal institution. Post that, the borrower is informed about the detailed terms and conditions, a loan agreement is signed, and the funds are released.

Example of Syndicated Loan

Let’s take a look at a loan syndication example to understand the scale of projects that would require a syndicated loan. If a corporation wanted to set up a dry-waste management plant, but lacks the required funds, they would approach ‘Bank A’ and ask for a loan. If Bank A doesn’t have the capital to finance the amount that the corporation is asking, it ropes in a number of other banks. They can then form a syndicate and release the funds to the company as per the agreed upon terms and conditions.

Financiers like Bajaj Finserv offer a range of loans that are incredibly easy to apply for. Click here to know more.

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Everything You Need to Know About Bridge Loans

Have you decided to buy your dream home by selling your current one? Then, you are probably looking for a gap financing option, assuming that the sale of your current home and the purchase of the next one might not happen simultaneously. Well, a short-term loan would be more suitable instead of a long-term one as it allows you to pay off the entire amount once you sell your home. How about Bridge Loans? Read on to discover some in-depth details about bridge loans in India.

What is a Bridge Loan?

A bridge loan, also called gap financing, is a temporary loan that acts as a bridge to meet your short-term liquidity requirements. When you are planning to buy a new home by selling off your old one, bridge loans allow you to fill the gap between the sale price of both the properties. The existing home, in this case, is considered the collateral for the bridge loan, meaning that the loan amount is decided based on its sale value.

The normal tenure of this loan is 12 months, and it comes at a higher rate of interest, albeit multiple benefits. If you are looking for a cheaper option, avail Home Loans from Bajaj Finserv as they offer low rate of interests in India.

What is the Quantum of Bridge Loans?

The bridge loan amount that you are eligible for, largely depends on your repayment capacity and the estimated sale price of your home. This cost will also include other charges like registration fee, stamp duty, and fees equalling four times your gross annual income or transfer fees subject to maximum of INR 50 lakhs, whichever is less.

What is the Bridge Loan Interest Rate in India?

If you have availed of a bridge loan, the existing home has to be sold off within one year, and the amount must be deposited in the loan account. The EMI is fixed by calculating the outstanding amount in the account. The rate of interest for bridge loans is exorbitantly high. If you feel that home loans are a better option, go for Home Loans offered by Bajaj Finserv, as they offer multiple benefits to the borrowers including refinance option and online account access.

How Does a Bridge Loan Work?

There are two ways in which you can structure a bridge loan. Either you can use it to pay off the liens on your existing property, or you can use it as a second mortgage on top of the liens.

In the first case, after paying off all the existing liens, the remaining amount is utilized as the down payment for your move-up home. Instead of making monthly payments on your bridge loan, this option requires you to make mortgage payments on the new home.

If you choose the second option, you will have to make the mortgage payments for the existing home as well as the move-up home. There are a number of situations where you should be cautious while opting for bridge finance, for example, a situation wherein you are unsure about being able to pay off the loan within a year. In such a situation, it is advisable that you finance your down payments with your shares, stocks, and other assets.

Bajaj Finserv is a lender who offers Loan Against Shares and Loan Against Fixed Deposits, with various benefits such as instant online approval, part prepayment facility, and zero-foreclosure charges.

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Underwriting Loans and its implications

Loan underwriting meaning
Underwriting is the process of ensuring that the requested loan, the collateral you provide, and the documentation, all meet the requirements of your lender. Underwriters examine your credit score, income, and your repayment capacity to determine whether the loan you have asked for should be granted to you. This process protects the interests of all the parties involved.

The loan underwriting process timeline cannot be defined, as it may take anywhere between a single day to a couple of weeks. It depends on factors like how busy the lender is, how many of your documents need approval, and whether the underwriter knows what they are doing.

Home loan underwriting
A home loan is a loan provided to assist you in buying a home. If you apply for a home loan, the underwriter will determine the risk that their lender will bear by granting you the loan. If you apply for a Home Loan at Bajaj Finserv, you can avail of low interest rates.

The home loan underwriting guidelines include:

Income: Your income is reviewed to examine aspects like the type of work you do, the length of your employment, and your opportunity for advancement. The underwriter also inspects your source of income and determines the likelihood of it sustaining in the foreseeable future.

Debts and liabilities: The underwriter reviews your other debts and liabilities. The lender needs to know that you’ll have enough money to repay the loan even after clearing your other debts.

Credit Score: Your credit or CIBIL score is also reviewed by your underwriter to determine how likely you are to pay back the loan.

The home loan underwriting process further involves a series of steps taken by the underwriter after underwriting your loan:

First, the underwriter verifies all the information that you, as a borrower, have provided. For example, they’ll call your employer to find out if you actually work where you claim to work.
The lender gets the underwriter to ensure that the price of your property is comparable to the value of similar properties in the market. This is done so that they know that you’re not saving a large chunk of the loan by buying a cheaper home. This is called property appraisal.

The underwriter then takes a look at the legal history of your selected property. A lender may not want to lend you money to purchase a house that has any prior claims on it.

Once the underwriter is satisfied with the accumulated information, the loan is transferred to you.

If you want a 3 month EMI holiday on your Home Loan, apply for one at Bajaj Finserv.

Personal loan underwriting

A personal loan is usually smaller than a home loan, and is used to finance a car, home renovations, or even a vacation. The loan tenure can last anywhere between one to five years.

The personal loan underwriting guidelines are similar to those followed while underwriting a home loan, except for the fact that there is no property involved. If you want a Personal Loan with zero prepayment charges, opt for Bajaj Finserv.

When you apply for a loan, after the several documentation processes and inspections by the lender, the underwriter has the final say in deciding whether your loan application should be accepted. So, ensure that you have all the necessary documents ready and provide accurate information to the underwriters.

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A handy guide to help you understand the difference between good and bad debt

While a loan can make your life better in many ways, a mismanaged debt would have negative effect on your financial well-being. If you’re trying to make the distinction between good and bad debt, then keep in mind these important points to help you understand the difference better.

What is Good Debt?
The key distinction between good debt and bad debt is that the good kind adds some sort of value to your life and usually has a low interest rate. Bajaj Finserv offers some of the lowest Home Loan interest rates in India. You can take a Home Loan with them right now at interest rates starting from 9.85%.

To understand in-depth what it means to add value to your life, let’s take a look at some good debt examples.

If you take a home loan and invest it in a real estate property, you’ve made a sound financial decision as the property will most likely appreciate in value over time. If you rent out the property, it will bring in monthly returns, and if you decide to sell it off later, you will likely make a profit.

Education loans are another kind of good debt, because they increase your qualifications and, by extension, your ability to make more money in the future.

Medical loans, when taken to improve your health or the health of your friends or family, are considered good debt because human life cannot be replaced, while you can always pay off the debt over time.

Responsible use of your credit card is good debt because it can help bolster your credit score, making you eligible for loans at better rates in the future. If you’re planning to apply for a credit card, you can go for Standard Chartered Credit Card with Bajaj Finserv, where you can avail the great schemes and reward points.

What is Bad Debt?
A debt is considered bad when it adds no value to your life and has unreasonably high interest rates. Bajaj Finserv offers Home loans with incredibly low interest rates starting from 9.75%. You can apply online for a Home Loan right now by clicking here, and get it approved in just 5 minutes. Now let’s take a look at some bad debt examples.

Taking a loan to spend the money on extravagant things that neither appreciate in value nor improve your ability to pay back the debt over time is a type of bad debt.

Buying a car to help you get to work would be considered good debt because it adds tangible value to your profession, but most cars begin to depreciate in value the minute they leave the showroom; this is why taking a loan to purchase an unnecessary luxury car could prove to be a bad debt.

Irresponsible use of your credit card is considered to be the worst kind of bad debt because it wrecks your finances on more than one level. First, it will drain your funds, bring in more stress to your life, and finally make your financial life and general life harder. It will also damage your credit score and make it hard to secure loans in the future.

Dealing with Debt
Any debt can become bad debt if you don’t keep up with the payments. It’s very important that you plan out your finances in a way that will enable you to keep up with the EMI payments.

The converse is also true. If you use the loan money responsibly and make the payments on time, your bad debt can easily turn into good debt.

Maintaining a good debt to income ratio will go a long way in easing the burden on your financial life. A good rule of thumb to follow is to keep your debts around 36% of your income to ensure that you can cope with the payments with no problems.

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Thinking of taking a loan? Then, apply online!

When you think of taking a loan, the first thing that comes to your mind is probably the long application process and the time you’ll have to wait to get the approval. If you can’t afford the long wait for sanctioning of a loan, you’ll be glad to know that there’s a speedier alternative available for you. Online loans are more prevalent now than ever before, and they are easy to apply and get approved.

You can apply online for Home Loans right now and get great Home Loan interest rates with Bajaj Finserv. Their interest rates, starting from 9.85%, are some of the lowest you can get in India.

All types of loans, from home loans and personal loans to business loans and more, are available to you online. All you have to do is choose your home loan provider, log into their site, apply, and wait for the quick approval. With Bajaj Finserv, you can get your loan approved in merely 5 minutes!

Besides a versatile range of loan options available to you online, the advantages of an online loan are many. Let’s take a look at two important advantages below.

1. Convenience: Anytime, Anywhere
As online loans take barely any time to get approved, they are perfect for financial emergencies. This convenience is the biggest advantage of choosing an online loan as opposed to going the traditional route and having to endure a long wait. Because these online loan application services operate round the clock, approval for your loans are extremely fast.

2. Almost Instant Loan Approval
When you apply for a Home Loan with Bajaj Finserv, you will get your Loan approved in 5 minutes. What’s more, when you apply online for a Personal Loan with Bajaj Finserv, you will be able to avail their part-prepayment facility right after you have paid your first EMI. This quick approval is particularly useful if you have a small business that needs funds immediately. Apply online for a Business Loan with Bajaj Finserv and you can take out a Loan of up to INR 30 lakhs.

Apply online for a personal loan if you want to finance any sort of immediate expenses. You can then pay it back over time in EMIs that are determined by the personal loan interest rates. The great thing about personal loans is that unlike home and business loans, there is no restriction on how you spend the money. You are free to do what you want with it, whether it’s funding your children’s education, taking a long-anticipated vacation, or financing a wedding.

When you apply for a personal loan online, you don’t have to wait long for the funds to be released to you as loan approval will take only a few minutes, in most cases, and you will receive the money in no time.So, next time when you’re thinking of applying for a loan, skip the tedious waiting by applying online.

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< Click here to check your Home Loan eligibility >

Second Home Taxation

Second Home Taxation Details You Need to Know

Buying a second home opens a lot of doors to earn additional income. The swift appreciation in property rates, in recent years, only makes investing in real estate more lucrative. If an insufficiency of funds is what’s stopping you from buying a second property, think again.
Banks today are more open towards aiding applicants with their Home Loans, given the reduced risk because of the currently favourable market scenario. You can get easy approval when you apply online for Home Loan and get instant approval for secured loans from financial institutions like Bajaj Finserv. As the owner of multiple properties you would be eligible for second home tax considerations too. All these benefits are sure to make you more financially secure in the future.
But before you go forward with it, here’s what you should know to help you with the tax planning for owning a second home.

Taxation on Second Home

This helps you to estimate the tax considerations you are eligible for.

  • If your property is on rent and there’s a constant source of monthly income, then the tax would be deducted from the annual income generated by the property. The income that is left after subtracting municipal taxes, standard deduction, and interests from it is taxable.
  • If your property is vacant or self-occupied, then the tax deduction occurs on the notional rent of your property. The same deduction as mentioned is subtracted from the notional rent and the remaining sum is taxable.

Second Home Tax Benefits

  • Home Loan Interest Rates:

    If you’ve taken a loan for a house that is occupied by you, then the interest amount repaid, up to 1.5 lakhs, qualifies for tax reduction under the Section 80C of the Income Tax Act. For a property that isn’t occupied by you, the interest rate can be claimed as a deduction with no upper limit irrespective of the property being rented out or not.

  • Municipal Tax Deduction:

    The Income-Tax Act 1961 provides a deduction for the municipal taxes paid during the financial year against your rental income. However, tax authorities allow deduction only for the current year and not for the year in which the tax invoice was raised. It is important to keep track of your tax payments to enjoy the benefits of tax deductions.

  • Standard Deduction:

    The Income Tax Act 1961 provides a flat 30% standard deduction on the total taxable value of your property. This is to cover up the costs incurred for maintenance, home insurance, or any other house-related expenditures. The deduction is irrespective of the actual money spent.

Knowing the market value of your property before you go ahead with the loan is vital. It helps determine the loan eligibility and tax considerations you are entitled for. Financial institutions like Bajaj Finserv offer you necessary guidance on all the legal and technical aspects of owning a property and tips regarding the current real estate market scenario.

Other Tax-relief Options

  • Pay Tax on the Cheaper Property:

    When you own two properties, you have the alternative of listing your rented-out property under self-occupied if the former has a lower realty value. It is financially beneficial when you have to pay tax on the smaller income.

  • Avail Deduction on the Joint Home Loans:

    If you have applied for a joint Home Loan, then each applicant is entitled to a deduction of a certain amount. This would mean that you could conceivably save twice the amount of tax deduction on your loan.

If you are unhappy with the terms and conditions of your current Home Loan, you have the option to transfer or refinance your loan through another financial institution. For example, since Bajaj Finserv has the lowest offer on rate of interest, you can consolidate your loan and refinance it there to help you reduce your financial burden.

Apply for Home Loan Online Check your Home Loan Eligibility

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