October 24, 2020 0 Comments Business

Business Loan Application Checklist to Follow

A Business loan can often be essential for setting up a new business due to the lack of funds. The loan can also be taken to fund ongoing projects and for business related investments to help the business progress at a faster pace. There are various kinds of loans that can be availed based on the needs of the business owner and the nature and scale of the business.

Another important aspect of taking a loan is to choose the business loan lender wisely. Choosing a lender with a flexible repayment schedule, no collateral and low business loan interest rates is important for a small venture so that you can focus on building up your business and not just on repaying the loan. The process of application for a business loan can be different according to the lender but there are a few general steps and rules to follow. 

Eligibility Criteria

Make sure you check the business loan eligibility criteria before applying for a loan. 

  • The loan can be taken by both professionals and self-employed non-professionals. 
  • The business must be profitable and successful for three years
  • The applicant must be between 25 to 65 years of age
  • Income Tax returns for the business should be filed for a minimum of 1 year
  • A healthy CIBIL score of 700 or above and a strong credit profile

Documents to be submitted

  • Identity proof – Applicants must provide an identification proof with appropriate KYC. (Aadhaar card, voter ID, PAN card, passport, driving license or any other valid government issued ID can be submitted)
  • Address proof – Documents like passport, electricity bill, ration card, telephone bill, lease agreement or trade license can be used as address proof. Any other document issued by the government as address proof can also be used to complete the loan application.
  • Financial documents 
    • A copy of the Income Tax Return filed for at least 1 year.
    • Bank statement for the last 6 months.
    • Balance Sheet and Profit & Loss Statement for the previous 2 years, audited by a Chartered Accountant. 
  • Proof of Business ownership 

Application Process

  • Online Application

Even though you can apply for the loan offline as well, the online application is hassle free and much more efficient. Simply go to the website of the bank and file the application for the loan required. It will ask for basic details about the applicant. 

  • Submission of Documents

The next step is to submit the documents required for the application to proceed further. The applicant can upload the documents digitally for the online application.

  • Verification

This is an important step as the bank will verify the application and documents submitted by the applicant and it might involve a personal discussion.

  • Approval

As soon as the documents and application are approved by the bank, the loan will be approved and sanctioned.

  • Disbursal

After all the steps are cleared, the applicant will receive the loan in their bank account in just a few days.

The process of acquiring business loans is easy and convenient to help the rising entrepreneurs of the country in creating their vision of the future.