Ghaziabad in India is enlisted among one of the fastest-growing cities by the UN. The city’s economy is dependent on industries that are generating a lot of employment. That’s the reason why entrepreneurs prefer this location for setting up their firms. Small businesses are booming, which, in turn, has increased the rate at which business loans are availed.
Financial institutions have offered almost Rs. 24 Lakh Crore worth of loans in the year 2018 to the corporate sector. The reason for this hike can be owed to the city’s connectivity with Delhi. The reasonable interest rate offered by various NBFC’s is also adding to this growth.
Necessary information to apply for a business loan must be ready with the prospective borrower. Business loan in Ghaziabad can only be sanctioned if the business fulfils some essential eligibility criteria.
The below-mentioned six steps for availing business loans can act as a guide for the new entrepreneurs.
- Decide on your loan requirements
Various types of small business loans are available like equipment loan, term loans, microloans, etc. and you need to determine the type of business loan you want to avail. Some of the available options are machinery loan, WC loan, and standard business loan. Each of these loan types has unique repayment tenor and eligibility criteria. Those who are operating their firms for the past two years and incurring sufficient revenue to repay the loan amount are eligible for a business loan in Ghaziabad.
- Research on lenders
For choosing a reliable lender, you have to shop around. It is suggested to select at least two to three lenders so that you can compare the maximum loan amount, interest rate and tenor. Small firms often select those investors who offer low APR.
- Compile financial statements
Financial statements need to be kept in place because lenders will review income tax returns, the capital flow of your firm and balance sheet before approving your loan. If you find any issues in your financial documents, then rectify it well ahead of time.
The prime objective behind reviewing financial assets is to analyse debt-to-equity ratio, accounts receivable and payable. Generally, lenders prefer reports audited by a CA. Some lenders do accept business loan documents without CA review to disburse a business loan.
- Important documents to gather
Alongside compiling financial records, some other essential documents should be gathered too. Commercial lenders offer business loans only after reviewing these documents. Business owners may have to present identity proof, business ownership proof, trade licence, Aadhar card, sales tax certificate, etc.
- Outline the business plan
A crucial step to gain approval for a business loan is to outline a business plan. With a well-defined strategy, lenders understand whether you are worthy of repaying the amount or not. Learn how to furnish a great business plan to procure a business loan. Your financial statements of past projects, assets that your firm possesses and future projections should be clearly outlined to increase the chances of gaining loan approval.
- Keep track on credit score
Apart from abiding by the business loan eligibility criteria and documents, checking credit score is vital too. CIBIL score decides whether an enterprise is eligible enough to avail a corporate loan or not. If you are applying for small business loans, then most of the financial organisations will prefer a score of more than 750. Check your credit report to know whether you are liable to avail a loan or not.Borrowers can now choose from a large number of lending companies who offer loan tailored to the entities’ preference. However, your credit score will determine business loan interest rates and amount. So, before you apply for a business loan, make sure that you have a good credit report.