What is Business Loan? How to Take Business Loan Best Guide 2022

Hello friends, here we are going to know what is business loan, how to take business loan, how to apply for business loan.

Friends, if you do any business or want to start a business or want to increase your business, then money is needed for all these works.

Money is needed at every step in any business from machinery, plant, raw mall, production, marketing and all the work to the sale.

And somewhere our business car gets stuck due to lack of money, but we can overcome this problem through business loan.

And you can grow your business and make it bigger, fulfilling all the needs related to money. But for this first we should have complete knowledge about business loan.

Like what is a business loan, how to take a business loan, how to apply for a business loan, what is the eligibility.

You should have complete knowledge about all these things then only you will be able to apply for business loan in right way and get business loan for your business.

So let us understand all the aspects of business loan in detail.

What is Business Loan?

A loan taken from a bank or financial company to meet the financial needs of your business, to buy machinery, to set up a plant, to expand the business, to work capital, to operate is called a business loan.

Any person who is doing his business or wants to start, grow his business, or any private company who does any kind of business can all apply for business loan and get business loan.

If you have all the documents and you fulfill all the necessary conditions of the business loan, then you can easily get a business loan and grow your business.

Business Loan Types

There are mainly three types of business loans which are as follows =>

Term Plan

Term plans are related to fixed capital and fixed assets creation. Short term and long term plans come under term plans.

Short term plans are short term business loans which take this type of business loan for small machinery, small plant or small businessmen who want to start their small business.

Generally, short term business loans have a tenure of 1 to 5 years and their amount can range from 50000 to 5 lakhs.

Long term business loans go for large business, large plant, complete machinery setup, fixed capital investment etc. Their tenure ranges from 5 years to 25 years and their amount can range from 5 lakhs to 50 lakhs.

Working plan

Such business loans are taken for the purpose of meeting the expenses of the operations like purchase of raw materials, production, marketing, salary, etc. to carry out the ongoing activities in the business smoothly.

The purpose of this type of business loan is to build working capital so that the activities of business operations can be conducted smoothly.

Non funding or guarantee

In this type of business loan, the bank does not give any money directly to you but acts as a guarantor on behalf of the borrower and provides assurance that the bank will repay the amount if the borrower does not pay the money.

In this type of business loan, the bank does not have to pay any money in the beginning, only it has to take guarantee like providing letter of credit in business deal.

Providing bank guarantee in international trade like shipping, tender etc

How to take Business Loan?

You must have seen many people applying for business loan and also seen that their business loan is not approved, then there are many reasons for this.

But the biggest reason is not having the right information to apply for a business loan, not knowing how to apply for the loan, what documents are required.

Two types of people apply for business loan, one is those who want to start a new business and one who has to increase their running business further.

Generally private banks and finance companies do not give business loans to the starters (to start a new business), but nowadays many MSME schemes have come up.

And if any scheme is going on in any private bank or finance company or they have started, then you can apply there to start a new business.

Otherwise, you can join any government bank like State Bank of India under the schemes run by the government like Mudra Yojana or any other.

And if you already have a business and you want to take a loan to increase it, then you can apply in any government or private bank or finance company.

But before applying for any type of business loan, you have to prepare all the documents, then only you will be able to apply and get a business loan.

Documents and conditions required for business loan

Age of occupation

The first requirement to apply for a business loan is that your business should be three years old. For this you have to provide business vintage proof.

If your business is less than three years old then you may face problem in getting loan.

For proof of this, you should have Gumasta (Business Establishment License) of business three years ago or current account of three years old or any other three years old trade license.

CA Certified 3 Year ITR

To apply for business loan, you must have 3 years CA (Chartered Accountant) certified ITR (Income Tax Return).

Your ITR should have a proper balance sheet and profit & loss statement. If you just go through ITR acknowledgment, you will not get the loan.

Civil score

You also need to have a good civil score to get a business loan. Even if your civil score is not good, you may face problems in getting a business loan.

For business loan, your civil score should be at least 700, if it is higher then it is better but 700 should be.

Minimum income

To get a business loan, your annual income should be at least 2.5 lakhs, if your annual income is less than 2.5 lakhs, then you will not be able to get a business loan.

Average bank balance

For business loan, the minimum monthly average balance of your business account i.e. current account should be between fifty thousand to seventy five thousand.

Even if the average balance of your current account works out, you may face problems in getting a business loan.

Any bounce of the previous loan

Before applying for business loan, if you have taken any loan and if any installment or check bounced in the last 6 months installment, then you may face problem in getting business loan.

So if you have already taken a loan before applying for business loan then no installment should not bounce back in the last six months.

Address proof of home and business

Apart from all the documents and conditions mentioned above, you will also have to provide your home and business address proof because if you fulfill all the conditions mentioned above, then in the second step the bank officials will verify your home and business address.

Id proof

Your ID proof like Aadhar card, PAN card etc. will also have to be submitted for business loan.

Business plan (report)

Apart from all the above mentioned documents and conditions, one most important thing which people forget or do not pay attention to is the business plan.

You should have a well prepared complete business report in which you have explained well what business you are going to do.

From where to get machinery, from where to get raw mall, how to produce, how to do marketing, how much profit will be made on sale etc. Everything has to be explained well.

Your business report plays a big role in getting or not getting your business loan because it is from your business report that the bank manager gets an idea of ​​whether you will be able to earn enough profit from your business that you will get the loan amount after all the expenses. Be able to pay

Apply for business loan

After submitting all the documents and fulfilling all the conditions now is the time to apply for a business loan. There can be two ways to apply for a business loan, first you apply by going to the bank directly and secondly apply through a consultant.

If you apply for business loan by yourself then it has been seen many times that the bank manager is not interested in giving the loan and refuses you on some pretext or the other or you have to visit the bank many times.

If you have a good relationship with the bank manager, then you get some help and your chances of getting a loan increase.

And if you have everything right and you know when to talk to whom, how to convince, then you get the loan.

Along with this, the second solution is that you apply for a loan through a consultant, if they have daily work to get the loan, then they know very well which file document where to put.

How to make a business report, whom to talk to, how to convince the manager. Along with this, they are also identified with the bank manager and the managers also trust them.

So it becomes easy to get a loan through them, so if you do not have much knowledge then you can contact a consultant for business loan.

But also keep in mind that the consultant you are contacting should be reliable and should not be any kind of fraudster, and we would recommend that you do not pay him any kind of money or fees in the beginning unless he is yours. Do not do loan session.

last word

Hope that we have given the information related to business loan like what is business loan, how to do business loan. We have tried to provide how to apply for business loan etc. You will love our effort and you will understand how to apply for a business loan.

If you follow all the above mentioned things then you can easily apply for business loan and take business loan and grow your business.

If you have any other questions related to business loan, then you must tell us in the comment section, we will be very happy to answer your questions.

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