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Tata Capital > Blog > Loan for Business > Can You, a Small Business Owner, Take a Business Loan?

Loan for Business

Can You, a Small Business Owner, Take a Business Loan?

Can You, a Small Business Owner, Take a Business Loan?

As your business grows, you will need to seek new business opportunities that will lay the groundwork for your business’ sustainability. Whether you are thinking of expanding your business, buying a new asset or investing in a new technology, you will need finance to boost to your business plans. Business Loans are one way in which SMEs can secure the financial support they need during a financial crunch. Tata Capital offers quick and hassle-free Business Loans with flexible options for small and medium business owners.

For the uninitiated, the world of small business loans can be a complicated one to navigate. So we have collated some expert tips that will help you achieve your goals:

1. Ascertain the Budget Needed:

Before you apply for a business loan, you will need to ask yourself a few basic questions - how much money do you need, and what is your exact cash situation? Without doing this, you will not be able to determine the right amount of business loan.

2. Are You Eligible?

Now that you have understood the basic step, next comes the business loan eligibility. As a business owner who needs a loan for business, there are some eligibility criteria you need to look into:

  • You must be a full or part owner of your business: Make sure you are at least a co-owner in the business for which you want to avail a business loan.
  • Ensure your business is an ongoing one: If your business has been running for 3 consecutive financial years, you have just fulfilled one eligibility criteria. However, at no point in those three years your business should have been halted or paused even for a month.
  • Your business should be compliant with statutory requirements: Paperwork and company documents are very important for your business loan eligibility as it gives authenticity to your business. Not just that, your business should be compliant with statutory requirements such as you being a registered business owner with the required permissions and licenses to run the business. You could be a small scale manufacturing unit or an owner of a services business. You could also be a professional such as a chartered account, business consultant or marketing professional offering professional services to clients with approvals from statutory authorities. The structure of your ownership could range from a sole proprietorship to partnerships to private limited companies to trusts and societies.      

3. Is your Business Profitable?:

Your business needs to be profitable for the last two financial years.  Lenders look for cash profit. Therefore, make sure the balance sheet and P&L account for the last two financial years show cash profit. Your business must show a growing trend in its top line number or turnover.

4. Do you have CA’s Certificate? :

After the introduction of the GST regime, your business must comply with all statutory requirements. One of them is the audit of your balance sheet by a registered chartered accountant. Therefore, ensure you keep your financial records squeaky clean and you will sail through easily in availing a business loan.

5. Do you have your Company Credit Report:

Just as you have a credit score for individuals, you also have a company credit report for business. Make sure your report is at the higher end of the scale so that you can negotiate for good terms for your business loan.

From the foregoing, it is apparent that availing a loan for a business is rather simple for running profitable businesses. It is imperative that your business should show an impeccable record of performance on all financial parameters especially in terms of profitability and growth. 

This was just the eligibility. You can check for various fees and interest rate and a general overview of Tata Capital business loans here.