How to qualify for a Business Loan

As a business owner, you’re responsible for the efficient functioning of every aspect of your enterprise, from quality control to marketing and finances. With efficient financial management, you can fuel your firm’s growth, market your products or services better to improve your bottom line and even produce more efficiently. However, whether you’re looking at growth capital, working capital, or funds to purchase machinery or hire a skilled workforce, you can rely on a cost-effective business loan.

What is a business loan?

A business loan is a financial offering you can avail when you need funding for your business’ various verticals. This solution can be used as working or growth capital, as you deem fit. Typically, these loans are offered in two variants: secured and unsecured, depending upon the lender. The secured variant requires you to pledge collateral in the form of an asset such as property, shares or even gold. Such loans generally have a longer tenor and the interest rate depends on the credit assessment of the lender.

Conversely, the unsecured option requires no collateral and you can obtain it quicker. The Bajaj Finserv Business Loan is an example of an unsecured loan that offers a sizable sanction of up to Rs. 80 lakh and has minimal application requirements.

Additional read: Types of business loans explained

How to get your business loan approved?

To qualify for this loan, you must meet lender-specific eligibility criteria. For example, to avail Bajaj Finserv Business Loan, you need to be between 24 years to 80 years of age, your business should have a vintage of at least 3 years and its income tax returns must be filed for at least the past one year.

Furthermore, you must also maintain a healthy credit score. This score ranges from 300 to 900 and is a reflection of your credit behaviour. As this is an unsecured offering, the lender will check your credit score to determine if you’re a low- or high-risk applicant. It is recommended that you maintain a score over 700 to comfortably qualify for a business loan.

Additional read: How to make the perfect business loan pitch?

What do you need to qualify for a business loan?

To prove that you qualify, you have to submit the following documents:

Documents related to your business’ finances: These include your business’ income tax returns, balance sheets, audit reports and bank statements.

Documents related to personal information: These documents are for general KYC purposes and include your Aadhaar card, PAN card, driver’s license or voter’s ID.

Documents related to your business’ vintage: Documents indicating business vintage are vital to proving your eligibility for a business loan. These include certificate of existence, business licenses, commercial leases and article of incorporation.

Additional documents: While the above documents are required by most lenders including Bajaj Finserv, you may be asked to submit extra documents on a case-to-case basis. These usually include revenue projections or a business plan.

Lenders have these protocols in place as they offer a high sanction along with value-added features. For example, the Bajaj Finserv Business Loan gives you up to Rs. 80 lakh at a competitive interest rate along with the Flexi loan facility.

This feature allows you to borrow from your sanction in parts, as and when you need money. Simply pay interest on the amount you use and make repayment easier by opting to pay interest-only EMIs through the tenor. By repaying the principal at the end of the tenor, you can lower your EMIs by up to 45% and make cash flow management hassle-free. You can also get approval for this loan in under 24 hours. All you need to do is check your pre-approved offer to unlock a customised offering and enjoy instant approval.