Frequently Asked Questions While Taking a Business Loan

business loan

Whatever your business plans and needs are, a Business Loan can help you arrange cash when you need it most, whether you’re facing a slowdown, need money to ensure cash flow, add to working capital, recruit new staff, purchase new equipment, or expand operations and reach of your business.

  1. Do I qualify to apply for a business loan?

You may be eligible for a business loan if you:

  • Are between the ages of 21 and 65
  • Have a business that has been profitable for the last 3 fiscal years.
  • Have a business with an annual turnover of at least Rs 1 Crore
  • Have a credit score of 700 or more
  • Have been filing income tax returns for your business for the past 1 year.
  • Have the financial statements of your business for the last 24 months and previous year’s turnover, duly audited by a CA.
  • Other relevant financial documents might be required at the time of document verification.

2. Long must you hold a business account to be eligible to apply for a business loan?

You can conduct business from a personal checking account if you own a sole proprietorship. But you need a business account if you are a corporation or limited liability firm (LLC).

For a loan, a company bank account is not necessary. Your business must have been in operation for at least three years to qualify for a business loan.              

3. Is obtaining a small business loan the most difficult task you will ever encounter?

No. Obtaining a small business loan is all about preparation, just like getting other types of funding. Success depends on keeping your books open and maintaining the reserve liquidity needed to convince your lending institution that you can pay your debts off consistently and on schedule. And experts concur that getting ready for the application procedure is the best way to minimise obstacles.

4. Flawless credit required to get approved for a small Business Loan?

Not really. You need a credit score meeting the eligibility criteria of your NBFC. In reality, obtaining a business loan while having a poor credit score is impossible. Online lending institutions like Clix Capital typically base loan decisions on the business vintage, credit score of the applicant and CMR rating of a business.

5. Is going through a bank the best option for getting a loan for your company?

Not necessarily. Traditional financial institutions like banks are not the only source of funding for entrepreneurs; there are other avenues. Several NBFCs and new-age lending institutions like Clix Capital can provide unsecured business loan to entrepreneurs without much hassle.  Unlike offline processes followed by the traditional financial institutions, Clix Capital accepts online applications with minimal documentation, and gives instant approvals after in-person verification to the applicant’s account. Even the interest rates offered are competitive and repayment tenure is flexible.

About the Author
Amaira Sharma is finance expert and former business growth strategist who has more than 8+ years experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses.

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