Small and medium enterprises are one of the most dynamic sectors in the Indian economy. It plays a crucial role in providing employment opportunities to a diverse class of people all around the country. SMEs brought equitable distribution to income and wealth in the regional areas and have been one of the largest providers of auxiliary services for the last five decades.
Despite their growth and contribution to the Indian economy,
SMEs still suffer from a significant deficit in available business finance. SMEs operate with a comparatively lower capital than larger industries. So, it can bring an adverse effect when they need to pay for export goods, higher quality raw material, business expansion, infrastructure overhaul, etc.
Business loans can be the ideal option of financing in such situations. Financial institutions offer a substantial amount of capital to help small and medium industries invest in infrastructure, maintain working capital and inventory, etc. A business loan can provide with the necessary assistance to support an enterprise’s growth.
Applicants only need to fulfil some basic requirements to avail a business loan. It includes easy-to-meet eligibility criteria and minimum documentation. The eligibility criteria for business loans can comprise the following.
For private limited or limited companies, financial institutions preferably look for concerns which have a net income of more than Rs. 1,50,000 per annum. For partnership or proprietorship firms, lenders look for a minimum of 25% stake from each partner. Also, the enterprise should be older than three years and should have its income tax returns filed for at least the last year. The applicant should be between 25 and 55 years of age.
The above-mentioned business loan eligibility criteria may vary between lenders. So, an applicant may have to submit some other relevant financial documents during verification.
Necessary documents required for business loans
An applicant has to submit the following documents when he/she applies for a business loan.
Checklist to follow when applying for business loans
A business loan can help an organisation come out of severe financial crisis. However, an applicant should take some additional steps to improve the chances of getting credit with the best available terms. Let’s take a look at a checklist that will ensure your loan application gets approved at the first go.
Look for important factors like the amount of money provided as credit, interest rate, tenor, etc. Ideally, you should select a lending company that offers a balance between all the above-mentioned factors.
Only have to provide some necessary details online to check your pre-approved offer.
So, business loans have multiple benefits for your firm. These unsecured loans provide the much-needed assistance to sustain, grow and overcome major financial hurdles faced by SMEs across the country. With their ample amount of funding, quick disbursal, and approachable terms, a business loan has become one of the most sought after financial products among organisations across India today.
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