If you are an entrepreneur, a business loan application will not be a new thing for you. Nor will be the long application process and the hassles associated with them. Most banks and several NBFCs in the market are offering unsecured business loans for SMEs. These small ticket short term financing options are meant for working capital use and business expansion.
When you go for loan shopping, the lenders present you with different terms and policies. The processing time, documentation and actual disbursal are subject to change from lender to lender. Here are a few common requisites your firm must fulfil for getting a business loan approval.
The age of your business and your legal age are both taken into account for unsecured loans. If your business was registered recently (say 6-12 months prior to application), you may face difficulty in getting an approval. Your legal age should be 21 years or more for a loan application.
Proof of Address
Address proofs such as Aadhar Card, PAN Card and utility bills are required for verifying your registered address. Lenders can also ask for additional proofs like incorporation documents for verification.
Income tax return records are also required by the lenders for verifying your company’s tax compliance. Usually financiers ask for 3 years of ITR records. If you have business partners, you can make them co-applicants. Some lenders offer discounted interest rates in such instances.
Lenders will also assess your annual turnover and ask for business account statements for the past year or more. Some NBFCs like Lendingkart Finance offer loans at turnovers as low as 6,00,000.
Other factors considered by financiers for providing unsecured business loans
- The purpose of loan is evaluated by lenders to make sure that the amount will be utilised for genuine business activity.
- Credit worthiness of the business and individuals is also taken into account before loan sanctions.
- Banks and NBFCs prefer applicants who own property, although it is not mandatory since the loans are unsecured.
Banks or NBCs?
While you can apply for a loan with both banks and NBFCs, the latter should be your choice. The reasons being:
- A hassle free online application process, such as the one offered by Lendingkart. Simply sign-up and apply within a matter of minutes.
- Minimum documentation requirement and quick verification process. The best part, you don’t need physical copies at all, just submit scanned docs for verification from your online account.
- Fast approvals and disbursals, normally within 3 days of document verification.
- Flexible rates which are customised just for you. The loans can be repaid in full after the first few EMIs (subject to NBFC policy). Lendingkart lets you prepay loans without any prepayment charges.
If you are looking for an SME loan, check out the Lendingkart website for more details. You can also download the Lendingkart app on your iPhone or Android smartphone.