The Facts about Business Loan

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Interesting Facts about Business Loan
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Overview
Becoming a self-employed business man is a great
reputation in the society but the problems faced
by the entrepreneurs from the day one of the
business is enormous.
It is great challenge for a person to overcome
all obstacles to become a successful business men.
Even great entrepreneurs of various industries
have struggled a lot of financial crisis for
setting up their business and to run their daily
business operations.
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Introduction
There are various sources for business people to
raise capital for their business. The most
trusted source is from banks. There are various
reasons why people choose banks as the best
source for raising capital for their business.
Banks provide lower cost of funds in the form
of Business loans. There are various types of
business loans at differential interest
rates. It will facilitate business people to
solve their financial crises.
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Types of Business Loan
New Project Loan
Top-up on Existing Loans
Working Capital Loans
Unsecured Business Loan
Secured Business Loan
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New Project Loan
Banks are interested in funding for new
businesses and also for new projects of existing
business. There are various criteria in getting
new project loan and differs from bank to bank.
Project loans are approved against collateral
of the person like residential property,
commercial property or empty land.
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Top-up on Existing Loans

• These loans are issued for
• Expansion of existing business
• Replacement of old business
• Diversification of an existing business.
• These loans are approved for short term or long
  term basis to buy
• goods,
• machinery
• Any fixed assets for the company.

New Loans
Existing Loans
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Working Capital Loans

• These loans are provided for the business
• To solve sudden financial crises.
• To repay expenses within short durations.
• To increase working capital
• Banks are more interested in providing working
  capital loans against
• Inventories,
• Stocks
• Receivable bills of the company.

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Unsecured Business Loan

• Every businessman cannot afford to pledge a
  security in getting business loan
• Thus bankers help them providing loans without
  any security
• It is given based on their bank transactions and
  income tax returns, good CIBIL score, good credit
  history.
• These loans are charged with high interest rates
  when compared to secured business loans.

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Secured Business Loan

• Business loans in which companies raise their
  capital against any security for the bank.
• It may include
• Residential Building
• Commercial Building
• plot
• Gold
• Shares
• Bills
• Insurance
• These are given as collateral to get funds for
  their business.
• The interest rate is preferably less than
  unsecured business loan.

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Requirements from Bank
Identity and Address proof
Statutory legal registration
Financial statement
Income tax returns
Financial Security
Previous Loan track
Litigation
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• Identity and address proof of the company
  Address proof and identity proof of partnership
  or proprietor business.
• Statutory legal registration of the company
  Whether the company is legally registered under
  government norms and have followed all procedures
  legally in setting business.
• Financial statement of the company Every bank
  is interested in seeing recent 1 year business
  transaction of the company.
• Litigation It will help banks assess the
  character of businessmen before providing
  business loan.

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• Income tax returns ITR helps the bankers to
  check the business performance, efficiency level,
  assets and liabilities of the company and also
  tax that company pays from their current
  earnings. This also plays a major role in
  deciding the loan amount for the business people.
  
• Financial Security It includes the fixed and
  movable assets of the company which helps the
  banker to consider providing business loans based
  on the asset value along with the business
  transactions. This also safeguards banks from the
  failure of businessmen that fail to repay the
  loan amount.
• Previous Loan track This is a very important
  factor considered by banks which will help them
  evaluate the financial condition of the business
  and also to check on past repayments on loans.

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Take Away
Though business loans are found to be a great
source for raising capital, businessmen undergo
challenge in getting timely funds from the banks.
In order to help them in availing timely loans,
NBFC are also now prepared to help them with
funds at various stages of their business.
Banks NBFC have also made the lending process
easy, with all verification done in shorter
time-span, doorstep assistance in collecting
documents etc. Businesses with good cash flows
credit score can avail timely funds with much
ease.
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Thank You
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