Getting a business loan may be that timely boost that your venture requires as it expands to meet higher demand. Speed is of the essence when you want a business loan. The ever-shortening deadlines, meeting with clients and prepping the business for the next phase of growth can take your time. This is why as a business owner, you should always practice a few things in advance. This approach will help you be totally ready when you actually need a business loan in a jiffy. Read on.
- Maintain all Documents
Let’s get the basics out of the way first. PAN, Aadhar card, Passport, Voter’s ID and Driving licence are the basics. Take it a step further with ITR and bank statements for past 6 to 12 months. Beyond this will be things like PAN for the company, along with computation of income, balance sheet and P&L account for the last 1-2 years. Do regularly get all financials certified or audited by a chartered account. This will add legitimacy to the documents, and only brighten up your chances of getting business loans fast. Documents like Trade Licence, GST credentials, as well as Sole Proprietorship declaration or certified copy of Partnership Deed if relevant may be required.
- Build a Good History of Business
Lenders have some criteria or guidelines when it comes to finalizing a business loan borrower. Profits are clearly a good way to attract lenders. As a thumb-rule, the business taking even a small loan should be making a profit for last 1-2 years. Also, be sure that the age of the applicant should not cross 65 years when the loan matures in the future. On the other end of the spectrum, even if a brilliant youngster with a great idea may find that a business loan is taking more time. Lenders, like the rest of us, prefer to go for borrowers who have some track record.
- Get Collateral Ready if You opt for that Route
While collateral-free business loans are popular for smaller amounts, for larger requirements of sums more than Rs 50 lakh a security is necessary. For those borrowers who are self-employed and want cheaper interest rates, collateral-based loans are much faster and easier to secure especially if they need bigger loans. Financial institutions accept stocks, real estate, jewellery, and vehicles as collateral. Certificates of deposit, treasury certificates, bonds, receivables, machinery, equipment, and insurance policies are also assets that can be pledged to take loans.
The amount of the loan offered depends on the value of the collateral. Its very important to have clear titles ownership of such assets ready, even before the lender asks for them. In this way, you can get proper service and faster business loans as and when you need them.