How to Get A Small Business Loan for Your Start-up?

A Small Business Loan for Your Start-up Most new entrepreneurs have ample ideas about starting a new business venture, but one of the biggest hurdles to resolve is the need for capital. Most entrepreneurs prefer to opt for loans from banks or other financial institutions. To apply for a loan for a start-up business startup business in Indian India, every lender sets certain eligibility criteria for borrowers to comply with. 

One must take note of these requirements, alongside the application process, to avail of a loan for a start-up in India.

The process to get small business funding 

  • The first step is to decide the amount required for your start-up.
  • Once the amount has been determined, the next step is to seek out options for lenders in the market. To avail of business loans, parameters like the credibility of the lender, support system on offer, the process of a loan application, and options for loan repayment needs to be factored in before applying.
  • The 3rd step is to get all the documentation ready.
  • The final step is to initiate the application process.

Eligibility for a small business loan

To avail a loan for startup business in India from leading NBFCs, individuals will need to follow a few eligibility requirements. While these might vary from one lender to another, a few of the basic criteria include – 

  • The applicant must be 25 – 65 years of age.
  • Applicants must maintain a CIBIL score of 750 or above.
  • The business must have IT returns filed for the previous years.

Factors to take note of before applying for a business loan

  • Credit score

A credit report important matters significantly when applying for a business loan.

A credit score helps gauge the creditworthiness of an applicant. It assures the lender that the applicant can pay off the loan availed. Factors like late payment of EMIs, irresponsible handling of credit, and frequent loan defaults can negatively impact an individual’s credit score. Therefore, it is important to not falter with repayments to ensure an easy loan approval.

  • A solid business plan 

To approve a business loan, any financial institution will gauge an applicant’s credibility first. New businesses need a full-fledged plan detailing information on pre-set goals, market analysis, past and projected revenue, expenses, and yearly growth before applying for the loan. These are the requisites of running a successful business.

  • Documentation 

Applicants should back their business’ eligibility with proper documentation. This includes – 

  • Proper account statement for the last 6 months.
  • Business registration certificate or GST filing.
  • Copy of applicant’s Aadhar card and PAN card.

The list of documents mentioned above is indicative and might differ from lender to lender.

  • Pre-approved offers

To avail a loan for a start-up business in India, most financial institutions set few eligibility parameters that owners must comply with for fast approval on the applied amount.

On pre-qualifying under these parameters, individuals can also enjoy pre-approved offers brought by financial institutions like Bajaj Finserv. These offers are available on various financial products, including business loans, personal loans, etc. You can check your pre-approved offer by providing your name and contact number. 

  • Positive cash flow

Management of cash flow is vital for loan sanction. Lenders will disburse loans only to those borrowers who have enough resources to repay the amount availed. A negative cash flow will adversely affect the liquidity of a business.

Thus, to avail of a loan for a start-up business in India, applicants must take note of these factors beforehand. In this regard, there are several reasons as to why you should choose a Bajaj Finserv business loan, because of less documentation and fast turnaround time. 

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