If you are a small business owner, you might require funds for your business at some point in time on an urgent basis. Getting a loan is the best option at this time for you. But it is very critical to decide the correct lender. The trick for this is to first do a research on the lenders in the market regarding what type of loans they provide, what is the eligibility criteria, what are the other terms and conditions, what interest rate will be charged, etc.
Banks provide loans for small businesses but they have an eligibility criterion one has to fulfill, the documents list is big, and the loan application process takes a lot of time.
NBFCs also provide loans for businesses but the eligibility criteria, ad the terms and conditions is different than that of banks. NBFCs have a simple online application process, the documents list is minimal, and the loan disbursal is also within just a few days, 3 days or less in some cases.
NBFCs will help you a lot when you need instant funds, thus the business processes won’t get affected.
When you want to go for instant loans, make sure that you check the eligibility criteria of the lenders, and have all the documents in place so that the loan application is not rejected.
But how do you make sure you get the best instant loan?
You need to pay attention to the qualification requirements/eligibility criteria, terms of repayment of the loan, rate of interest applied to the loan, maximum loan amount offered by the lender, and the other terms and conditions of the lender.
When you consider taking a loan from an NBFC, here is the eligibility:
- Your age should be a minimum of 21 years and a maximum of 65 years of age.
- Turnover of the business should not be less than Rs. 15 lakhs and not more than Rs. 1 crore.
- The business should be active since at least 3 years in some cases the lenders also consider a year old business.
- The credit score of the applicant should be more than 750 ideally. Lenders consider the score between 750-900 as good and increase the chances of loan application approval.
List of documents required for an instant loan from an NBFC:
- Aadhar and PAN Card of the proprietor.
- Last 12 months bank statements of all the bank accounts in PDF format.
- Latest balance sheets and P&L.
- ITR for the previous 2 years.
- Latest Audited Balance Sheet & P&L.
- Shop Establishment License or Gumasta.
- GST Registration Receipt.
- GST Receipts/Challans.
When you apply for a loan, there are certain things you should avoid in order to prevent business loan rejection:
1. Credit score which says you have defaulted
CIBIL report is very important along with maintaining a healthy credit score. If your credit report shows you have defaulted in the past or have had many repayment failures, there is a chance that you can face rejection. Also, if your credit report shows a lot of debt, the lender mostly will not consider your application.
Maintaining a healthy credit report and timely loan payments will ensure your loan application never gets rejected.
2. If you apply when your company is new
If the lender feels that your company is still new, and there is no sales turnover, the application will get rejected. This is because the lenders who give quick loans expect quick repayments for which the business should show that it is financially strong.
3. If you are a loan guarantor for somebody
If you are loan guarantor for somebody, ensure that the business you are a guarantor for is strong enough to repay the loan amount. Because if the business fails to repay, it will also put your credit report at risk and will leave a bad mark.
Here is what your loan application should contain:
1. Specify your requirement
Specify the amount of money that you need for the business with a detailed break-up of funds if possible, so that the lender can see how you will be utilizing that money.
This has to be done to convince the lending institution of your repayment on time.
2. Mention the type of your business
Mention the type of business you have i.e., partnership, public ltd., proprietorship business, or a Pvt Ltd. company.
Apart from this, some lenders also ask for details about the business turnover, profit & loss statements, and summary of the details of the business owner.
It is, therefore, advisable to consult the chosen lender or NBFC in advance and understand the eligibility & documentation criteria and then go ahead.
3. Be clear about the financing that you require
Be clear about the financing that you require. There are certain times when some unseen costs also appear from nowhere. In such a case, a flexible loan (which does not have a rigid policy) and is also instant will be the best option to go for.
If you are looking for an instant loan for your business, contacting Gromor Finance would be a good option. Gromor Finance offers loans at affordable interest rates, and the loan disbursal is also within 3 days or less!