Arranging funds can be difficult as well as time-consuming for small businesses. The problem is further aggravated when owners of Micro, Small, and Medium Enterprises (MSMEs) does not have a good credit history. It may so happen that a business may immediately require more machinery or working capital for its operations. In such cases, there is the option of the instant business loan offered by several NBFCs.
Eligibility for an instant business loan
The eligibility criteria are –
- Applicant’s age: To apply for an instant business loan, the applicant must be between 25 years to 55 years.
- Business vintage: The business should be operational for a minimum of 3 years.
- Income Tax Return: Businesses should file its IT Returns for at least one year to be eligible for such a credit.
Along with the eligibility criteria, an applicant should also learn about the necessary documents that he or she needs to submit while applying for credit.
Following are the necessary documents required for a business loan –
- Identity proof
Identity proof of an applicant includes Voter ID, Aadhaar card, PAN card, driving license, passport, or any other valid document that has been issued by the government.
- Address proof
For address proof, one may submit a recent utility bill such as electricity bill, telephone bill, as well as other documents like a copy of the applicant’s ration card. The proof of address also includes passport, lease agreement, certificate or trade license, etc.
- Proof of business ownership
The proof of business ownership depends on the profile of an applicant, as well as the type of business –
- Self-employed professionals: Sole proprietors have to submit registration documents apart from Municipal Tax receipt, PAN card, Income Tax Returns etc.
- Self-employed non-professionals: Registration document of sole proprietor, identity proof of business owner, Income Tax Returns, Bank Statement for the last six months, statement of debt/creditor/periodic stock and GST return etc.
- Private Limited Companies and Partnerships: Memorandum and Articles of Association for Private Limited Companies, and partnership agreement for Partnership firms. The other documents include Income Tax Returns, GST Certificate, Registration certificate under Shops and Establishment Act, etc.
- Financial documents
There are specific financial documents that have to be submitted by both self-employed professionals and non-professionals to avail an instant business loan. Such documents include –
- Copy of ITR filed for a minimum of 1 year
- Bank statement for the last 6 months
- Profit and Loss Statement and Balance Sheet of last 2 years, duly audited by a Chartered Accountant.
Benefits of business loans
There are a wide range of benefits in availing business loans –
- Customized loan
Prominent NBFCs offer customized business loans to meet the unique requirements of various applicants. There may be specific working capital loans, machinery loans, or business loans for ladies to support the growing financial requirements.
For instance, lenders such as Bajaj Finserv offer up to Rs.20 lakhs as Business Loan to eligible applicants.
This reputed NBFC also extends pre-approved offers to existing applicants. Such offers are available on a range of unsecured and secured financial instruments like personal loans, business loans etc. You can check your pre-approved offer by submitting your name and contact number.
- Time taken for loan sanction
The sanctioning of loans is comparatively faster due to less stringent eligibility requirements and documentation.
- Rate of interest
Interest rates are perhaps the most important factors that applicants should consider before borrowing. NBFCs offer some of the best competitive rates of interest for business loans making it easier for small business owners to afford them.
- Non-collateral loan
Business loans are collateral-free, which means no assets have to be put online to avail financing. Given that there is no need to pledge collateral, the funding becomes much faster.
Hence, an instant business loan enables a business owner to be ready with cash in hand. It helps them to meet the expenditure and, at the same time, successfully implement a big project.