While the Indian economy aims to grow with an objective of reaching $5 trillion by 2024-25, the Economic Survey 2019 shows that the nation has shifted gears towards sustained economic growth.
Meeting this laid out roadmap for the upcoming 5 years and the progress of the past decade, one can consider India’s businesses to be a key driver to its escalated economic prowess. In an attempt to boost this unrestricted pace, multiple undertakings are being made to stabilise the financial standing of these enterprises. It includes offering financial assistance in the form of business loans by multiple reputed lenders.
While availing such financial coverage is the much-required benefit for each business irrespective of the genre of its trade, one needs to make an informed choice while choosing these loans. It ensures that entrepreneurs opt for a loan that best suits their current financial requirements. All that one needs to do is meet the essential business loan eligibility, follow a convenient and hassle-free application procedure to avail an advance, and provide the required documentation.
However, prior to approaching a lender and availing a business loan, there are a few aspects that potential borrowers may take into consideration. It enables prospective borrowers to settle upon a lender that caters to their requirements while providing an option to choose from the different types of business loans.
- Required and offered credit amount
Take into account the list of impending expenses and compute the total amount that you need to borrow. Settle upon a lender that provides you with the required credit amount.
Although reputed lenders offer up to Rs. 30 Lakh, make sure not to borrow more than what is required. It safeguards one against any unnecessary financial burdening during the repayment procedure.
- CIBIL score
Considering that business loans require no collateral, lenders look into the creditworthiness of a potential borrower via his/her credit score. When an individual applies for a business loan, the lender in question goes for a soft credit pull and checks the summary of a credit report.
However, it is during the underwriting of the loan that the lender opts for a hard credit pull and looks into the details of the individuals and business’s repayment history. A credit score of 700+ is deemed as a part of business loan eligibility. So, ensure that your business’s CIBIL score stays above 700 before applying.
- Tenor and rate of interest
The repayment tenor and rate of interest offered play a significant role in determining the EMI of a loan.
A lower EMI ensures convenient payment structure and eases repayment without straining one’s budget. Potential borrowers can also use a business loan EMI calculator to find the right repayment tenor that fetches them a competitive monthly instalment.
- Eligibility criteria
Keeping in mind the convenience of the potential applicants, the business loan eligibility criteria required by lenders are kept to a bare minimum –
- He/she should be in the age bracket of 25 to 55 years.
- The business should have an IT filed for at least the last 1 year.
- The business should have a vintage of a minimum of 3 years.
Following the consideration of these aspects, one can approach a suitable lender and avail a business loan to provide a financial boost to their trade. Make sure to compare features provided by several lenders to choose the best option.