There is an Abba song what goes something like this: “Money, money, money, must be funny in a rich man’s world…” If you were that person having all the money you needed, then this blog will make no sense to you. If you are not that person and running your own business you know for a fact that even a little bit of money can go a long way.
However, if you don’t what can you do? Running a business is not as simple as you would like it to be. With the constant ups and down, you often find yourself in a place where you may require immediate funds. Cash crunch maybe due to any reason. That does not mean you stop running your business. Borrowing money is an option. Now when we say borrowing, we do not mean from a money lender like they would do in the old days.
Here, we mean business loans.
For a first timer, applying for a business loan is a daunting task. For someone who has availed a loan for his business, knows the nitty-gritty’s of the process. If you are about to apply for a business loan there are a few things you have to include in your application:
- Company Documents: Let us start with the basics. You need to have all your company documents in place. Company PAN Card, Income Tax Returns, Audited Balance Sheet with Profit & Loss Account and bank statements are the basic company charter documents that you will need. If your business is a private limited company, you also need to submit your Articles of Association as well as Memorandum of Association when you apply for a business loan. Financial institutions and NBFC’s like Tata Capital ask for the basic company documents, duly signed by the managing director when you start the process of applying for a business loan. You have to include all of them so that the lender knows that the company has followed all its compliances and is up to date.
- Covering letter: A Covering letter, generally addressed to the general manager of the financial institution should also be included when you are in the process of applying a loan for your business. This letter will give the financer an idea about the company and the business in general. You do not need to write the entire history but a general idea about the business will work in your favour.
- Business Plan: This is one of the most important things to include in your business loan application. Firstly, no financial institution will give you money unless they know what the purpose is. Be it expansion of business, working capital requirements, purchase of additional machinery it is better to explain to the lender the purpose of the business loan. Secondly, a business plan also gives you a clear picture as to how you can best utilise the business loan that you have applied for. This just makes it simpler for you as well.
- Personal Details: The personal details of the owners, partners, managing directors will also need to be furnished when you apply for a business loan. The KYC details of the management are just as important as the KYC of the company. You will need to submit the same while you apply for the business loan
- Business Credit report: Just like a personal Cibil Score, you will need to furnish a business credit score while you apply for the loan. The credit score will give your lender enough confidence to help you with a business loan as the score. A high score implies that you have paid all your past loan instalments on time and you have a good standing in the market with other financial institutions as well.
Financial institutions like Tata Capital’s business loans can help you as a business owner with the right amount of funds so that you do not face a cash crunch while running your business. Including these five things in your business loan application can help you pave a simpler way of availing a business loan.