Guide to Business Loan
Businesses may consider taking out a business loan without collateral. These types of loans can be convenient for managing emergency monetary requirements, and the application process is typically faster and easier. To help clarify the process and answer common questions, we’ve put together a list of business loan FAQs. Whether you’re wondering about eligibility requirements or repayment terms, our guide can provide the answers you need to make informed decisions about financing your business.
How can MSMEs obtain business loans without collateral?
Small and medium-scale businesses today face a significant challenge in obtaining loans from financial institutions. This is due to the requirement for collateral. Many MSMEs today do not have collateral for loans. These businesses can take a Business Loan. However, Unsecured business loans are given solely upon the creditworthiness of the businessman borrower.
To be eligible for an unsecured business loan, the borrower should have a good CIBIL score. That is a credit rating, good credit history, and good cash flow. Our business loan FAQs can help provide the clarity you need to make informed financing decisions for your business.
Why should you go for a Business Loan?
1. Helps your business grow at a faster pace
By taking a business loan your business can grow at a faster rate. Thus, you can also finish any stagnant projects or ventures with the help of a business loan.
2. The value of the loan is not dependent on the collateral
When applying for a secured loan, the amount of the loan is dependent on the collateral being used. But while taking an unsecured loan, you may get a bigger amount of money. Because the lender is making decisions based on your cash flow, credit profile, the health of your business, and so on.
3. Faster Disbursement of Loans
As a business loan does not require collateral, the disbursement of the business loan is faster. The financial institution checks your documentation, proposal, and track record and then sanctions the loan. Less paperwork is required for unsecured business loans in India.
4. Repayment in EMI
You can repay the business loan in the form of EMIs. So, the interest rate will be applied to the EMIs over the term of the loan.
5. No risk to your assets
An unsecured business loan is a loan where no collateral is necessary. Thus, all your assets are safe from any risks.
6. Eligibility Criteria for Business Loans in India
The Eligibility criteria for a business loan may differ depending on various financial institutions and the situation of the business. Here is a list of the general eligibility criteria for a business loan:
- The business must have its previous year’s financials duly audited by a CA.
- The borrower must have a good credit rating in order to qualify for an unsecured business loan.
- The business should have a vintage of at least 2 years.
- The business needs to have its Income Tax returns filed for at least the past 1 year
How Unsecured Business Funding Can Help Your Business Succeed?
How do you get Business Loans in India?
Business Loans can be defined as loans given to businesses and corporations against any kind of collateral. It is one of the most convenient financial products for businesses to manage emergency conditions of the business.
A. Assessing the requirements of the client
We at Terkar Capital will first understand the requirements of the client. We will also talk to the client about the future of their business, their plans to expand, restructure so on, and so forth. So, after assessing the requirements of the client, we will make an application for the business loan.
B. Application and Documentation
Many business people have experienced the tedious nature of the documentation that needs to be done for the bank loan process. Thus, we at Terkar Capital take care of the documentation. We understand what stakeholders require to disburse the loan to our clients.
Once we receive the required documents we analyze the financials of the company and choose the financial institutions that best suit the client’s requirements. This helps to avoid unnecessary inquiries to CIBIL and messing up while raising the finances.
C. Get your loan
After your proposal and documentation have been reviewed by the financial institution, your loan will be sanctioned. During the process, whenever the financial institution is in need of any clarification or any documentation we arrange for them. Thus, our association with the client doesn’t stop with the disbursement of the amount, rather it starts.
We make sure the client should not have any problems while dealing with the respective financial institutions during the loan tenure.
What are the Documents Required for Business Loans?
Business loans are one of the most convenient types of loans for growing businesses. The documents required for Business Loans differ from one financial institution to another and as per the constitutions of the business. Here is a list of documents usually required for a Business Loan:
A. Documents Required for Public Limited & Private Limited Companies
- 3 years of income tax returns, Balance-sheet, Audit Report of the Company
- Company Pan Card, 1 Year All Current Account Banking shown in Balance Sheet Till date
- All Directors KYC and 5 Photos
- Shop act, Office Telephone, and Electricity Bill Latest, MOA, AOA
- Companies All Loan Sanction letters, Cash Credit sanction letter, Closer letters if exist
- All director’s residence telephone and electricity bill latest
- Shareholding pattern on the letterhead of company attested by CA
- Company Profile
- GST returns to date
B. Documents List for a Proprietorship Firm
- 3 years of Income Tax returns, Balance sheet, Audit Report
- Pan Card, 1 Year All Current Account Banking shown in Balance Sheet Till date
- Proprietor KYC and 5 Photos
- All Loan Sanction Letters and Closer letters, Track Records, and CC Sanction Letters if exist
- Shop-act, GST Certificate, Office, And latest Residence Telephone and Electricity Bill
- GST returns to date
- Company Profile
C. Documents List for a Partnership Firm
- 3 years of income tax returns, Balance-sheet, and Audit Report of the Company
- Firm Pan Card, 1 Year All Current Account Banking shown in Balance Sheet Till date
- All Partners KYC and 5 Photos
- Shop Act, Office Telephone, and Electricity Bill Latest.
- Firm All Loan Sanction letters, Cash Credit sanction letter, Closer letters if exist
- All Partners residence telephone and electricity bill latest
- Shareholding pattern on the letterhead of the company attested by CA (As of date)
- Company Profile
- Partnership Deed
- GST Certificate & returns to date
Business Loan at Terkar Capital
The experts at Terkar Capital are trained to assist businesses seeking a business loan without collateral. Many small and medium-scale businesses face challenges in obtaining loans due to the collateral requirement. However, unsecured business loans are an option based on CIBIL. To be eligible, the borrower should have a good credit rating, credit history, and cash flow. We assist in the execution process, eligibility, and repayment terms. Learn from the business loan FAQs.
