A quick business loan is a financial advance which lending institutions approved and disbursed within 24 hours. These loans are tailor-made to solve short-term financial issues with your business.Be it to increase cash flow, upgrade or lease machinery, restock inventory, renovate the setup, etc., these are loans which can revive your struggling business.These loans can also help you consolidate debts. You can benefit from the low interest rates of these loans to repay any existing debt and reduce your financial liabilities.Although these loans are customised to help you meet short-term monetary requirements of your business, you must have a complete idea on them before you apply for one from a lender.7 points to consider about a business loan with quick approval and disbursal –
- Choose the right loan
NBFCs offer several variants of such business loans, viz. –
- Machinery loans
- SME and MSME loans
- Working capital loans
- Business loans for women
Also, these loans differ from each other. Hence, you have to select the most suitable loan as per your requirements. For example, if you want to avail loan only to lease or purchase new machinery or equipment, you should avail a machinery loan even if your business falls under the MSME.
- Business vintage of least 3 years
Financial institutions require applicants to have a business vintage of at least 3 years. Also, you have to be between the ages of 25 and 55 years to be a prospective borrower.
- File income tax returns
One of the other eligibility criteria that you have to fulfil is filing income tax returns. You may have to file such returns for at least the previous year and furnish the same for a loan.
- Audit your financial statements
Some of the documents that you have to have to provide to avail a quick business loan include financial statements like balance sheet, profit & loss account, etc. You may also have to audit the previous year’s statements by a CA.Other documents that you have to provide:
- KYC (PAN, Voter ID, Passport, Aadhaar, Driving License).
- Proof of business (Memorandum or Articles of Association, Trade license, GST registration, Shops & Establishments Act certificate, etc.)
- Bank account statement of the previous month.
You may also have to provide additional documents.
- Maintain a healthy credit score
According to CIBIL, financial institutions approve 79% of credit applications from individuals who have a credit score of 750 or more.When you apply for a quick business loan, the lender will check your credit score. The higher the score, the more creditworthy you are to avail such loans.
- Carefully choose the loan tenor
Lenders offer you tenors that range from 12 to 60 months on business loans. Selecting the right tenor is crucial as your cost of loan, i.e. your principal with total payable interest depends on it.A long tenor will automatically increase the cost of loan while a shorter tenor will do the opposite. On the other hand, a longer tenor reduces the EMIs whereas a short tenor will come with higher EMIs.Use a loan EMI calculator before you apply for a business loan to help you determine your monthly and total financial liabilities.
- Check for additional benefits
Financial institutions have several features to offer you. Hence, check and compare them beforehand.NBFCs like Bajaj Finserv provides pre-approved offers which save you time when availing financing by simplifying the process. Pre-approved offers are not only available on business loans but also on home loans, personal loans and numerous other financial products and services. You can check your pre-approved offer by providing your name and phone number.Some financial institutions require various charges for these loans. Before you choose a lender, take note of fees for:
- Processing
- Missed EMIs
- Part pre-payment
- Document processing, etc.
After you avail the loan, plan your finances to make sure you pay the EMIs on time. Using such quick business loans properly is one of the financial skills business owners should have. Improve your business credit score along the way to benefit from better loan terms and benefits in the future.