Are you looking for small business loans in starting your business? Are you interested to know how to apply for business loans in India? Here is a step-by-step guide for applying for small business loans in financial institutions.
Indian small and medium enterprise sector is considered as the backbone of the economy and SME loans are required as start-up capital or for an expansion. If one doesn’t know how to apply for small business loans with all relevant papers it can be a challenging task for him.
Here we list down things to consider or the preparation of your small business loan application and getting the paperwork right.
1. Do Your Homework For Small Business Loans
As SME loan seekers, you have choices of lending institutions and banks. Check whether you already have an existing business relationship with a bank as it can help your application process much easier. Follow all the online reviews on potential lenders and check bank websites to get all the information and insight to compare the terms and conditions of different SME loan categories.
2. Ensure Your Credibility For SME Loans
Another thing to consider seriously is your credit history. Funding institutions are unlikely to loan out money to anyone who has defaulted on a loan, ever, so if you haven’t defaulted on a loan yet then make sure it stays that way. Pay off your existing debt before you apply for a business loan, and this should greatly improve your possibilities of getting the loan amount you desire. check your score and details on www.cibil.com before apply for a small business loan.
3. Go With Choices For SME Loans
Follow the type of businesses the bank deals in before choosing. Where the scope of tailoring the bank is can provide to suit your ultimate business needs. What are the terms and conditions of the repayment structure? Is there any tax benefit or any option of higher loan tenure?
4. Get The Documents Proper For SME Loan
To get the approval of an SME loan, the financial institution will try to ensure your application meets all the required criteria with a well-written business plan. Make a checklist of the important document required and start preparing. You can go buy the following useful checklist:
- Loan application form
- Address proof
- Ration card / Pan card / Passport
- Passport size photograph of the applicant
- Certified copy of MOA / Partnership deed
- The audited balance sheet for the last 3 years.
- It returns of directors/partners
- Six months bank statement
5. Be Interview Prepare For SME Loans
Be prepared to confidently present your business plan at the loan interview while explaining how the loan money is going to be utilized in your venture.
6. Understand The Costs For SME Loan
Check the costs, fees apart from the interest being paid. Understand the impact of these on your loan transaction. Seek all the clarifications you need before making the decision.
With these basics in place, it will surely increase the possibilities of getting small business loans for your dream project.
Rupak Chakrabarty
Rupak is the founder of MUVSI. He is a small business consultant by profession. His mission is to make people know how to make money and understand personal finance for a better living.