It is estimated that there are more than 5 crore small and medium businesses in India. These businesses account for a significant portion of India’s GDP. Almost 40% of India’s workforce is employed by small businesses. Examples of small businesses include firms that are into paper cup making, candle making, cashew processing, packaged drinking water production, and flex printing. These businesses need loans for investing in infrastructure, expanding operations, improving technological applications, regulating machinery, and maintaining records.
Hence, applying for business loan can reduce the problem of funding for small and medium enterprises. Every business owner can avail the loan for expanding and growth of their enterprises. There is no such longer procedure for availing it. One can apply offline or online as per the choice.
Here Are 5 Simple Steps To Get A Small Business Loan In India:
- Know your loan type:
Different businesses need different types of loans, depending on the amount of money required.
- SELF-EMPLOYED BUSINESSES:
As an entrepreneur, suitable, unsecured funding is desirable for best business support. Self-employed business loans help you with the best provisions for resource funding, operational expenses, and asset security, as it requires no collateral.
Managing the expenses of diurnal operations can get hectic for manufacturers. Business loans for manufacturers help take care of this financial load by ensuring that they are never short of working capital, required from the purchase of raw materials to investment in marketing strategies.
Traders, being a key link between producers and consumers, utilize loan amounts primarily in buying and selling goods, renovating workplaces, purchasing new equipment, etc. Special business loans for traders aim at providing unhindered financial services to traders at economic interest rates.
- Design a strong business format
The main attraction of a business to a lender is a well-detailed plan, which points to increasing profits, and thus, increasing chances of repayment of the loan. The plan could include the following:
- Company history
- Service description
- Details about the Management
- Financials vetted by a Chartered Accountant
- P&L Statements and Balance sheets which are vetted by a Chartered Accountant
- Marketing strategy
- SWOT analysis
- Work on credit scores
Credit scores are measures of how efficiently you manage your debts. They are evaluations of your ability to repay loans, such as mortgages, car loans, credit cards, etc. It is recommended that you maintain a high credit score. Higher credit scores represent your creditworthiness and capability to repay in time.
Credit scores depend upon payment history, frequency of loans, type of credit in use, and time taken to clear off the debt.
- Go for Online business loans:
Several lenders have a thorough loan application process which can be accessed through the internet offering great benefits to business owners:
- Ease of comparison: One can compare offerings provided by different lenders. One can even check out online reviews about multiple lenders.
- Speedy approval:
Standing in long lines and filling forms can take a lot of time. These also tend to be full of hassles. An online loan application process can eliminate such hurdles.
- Paperless process:
In most cases, customers would be required to upload soft copies of KYC documents. So one doesn’t need to run around arranging printouts or photocopies.
- Can complete application process from anywhere:
Small business owners have several important business-related activities to look after. Visiting a lender’s branch and completing the application process may take away several precious hours. Thanks to online banking, one can complete all the procedures from the comfort of their residence or office.
The process of borrowing business loans from lenders online involves only one additional step to that offline – providing your Social Security Number and your address.
- Use Business loan EMI calculators:
Loans are usually paid off through EMIs. A business loan EMI divides the total loan amount into equal fixed parts that have to be paid on a regular monthly basis till the entire amount is cleared. Small businesses particularly benefit from this system because they run on tight cash, and need funds for expensive paraphernalia, but lack enough liquidity to be able to pay for the same.
The use of the business loan EMI calculator for computing the amount to be paid at the end of the month helps a small business owner to plan her expenditures and EMI payments accordingly.