Whether you’re looking to expand your services, hire help or upgrade equipment, having funds at your disposal is important for the survival of your business. Here’s where business loans come into the picture.
The number of startups in the country have been gradually on the rise. Around 7200 startups came up in 2018 alone, according to NASSCOM with the help of business loans or investments.
Now whether you get a business loan or not depends on several factors. These are –
Credit history and score
Lenders take into account your credit history and score before deciding whether or not to approve your loan application.
Established businesses have to furnish documents detailing how the enterprise has fared financially and what are the future plans.
Lenders also need collateral from your side, like a house for example, to provide loans so they can take ownership of your house if you fail to repay the loan
If you have insurance, information on that needs to be provided so that the lender gets a better idea of your business and financial history.
Apart from all this, the banks also require a personal guarantee from your side in the form of a signed document.
Now that we’ve looked at the factors that come into play when applying for business loans, let us take a look at what the lenders require in the form of documentation for approving a loan.
Statutory legal registration of the company
This is the registration document the company signs.
Financial statement of the company
The bank statements of the company for a particular period of time.
Income tax returns
IT returns to ensure there is no fraud.
Previous Loan track
Lenders also look at your track record of previous loans to check your payment patterns or if you have defaulted earlier.