A commercial loan or business loan is an unsecured credit facility offered by financial institutions to business organisations. These loans support the smooth operational activities of large business establishments as well as small and medium-sized enterprises (SMEs).
This credit facility helps a business sector financially to meet its working capital requirements, boosting cash flow and enabling them to withstand economic fluctuations.
How to Apply for an Unsecured Business Loan Online?
Mentioned below are the steps in which you can apply for a business loan online:
Step 1: Navigate to the official portal of a financial institution
Step 2: Go to the loan offers section, and below the list, select ‘business loan’
Step 3: Select on ‘Apply Now’ option
Step 4: Fill out the application form for a business loan with personal details
Step 5: Select a loan offer that suits you the best
Step 6: Enter your credit amount and tenure
Step 7: Upload photocopies of the required documents
Step 8: Submit the application form
Upon completing all these steps successfully, your application process for a business loan will be completed, and you will have to wait until your lender approves your loan request.
Now, before you follow these above steps to apply for a commercial loan online, take a look at the eligibility criteria to apply for this loan.
Eligibility Criteria of Business Loan
Following are the eligibility criteria you need to fulfil before applying for a business loan online:
- Applicant should be an Indian citizen
- Applicant needs to be a self-employed person
- Age of the applicant should be between 26 and 66 years
- A borrower needs to have 3 years of business experience
- Income Tax Return of your business for last 2 years
After knowing the eligibility criteria to apply for a commercial loan online, have a look at the required documents to avoid unnecessary last-moment hassles.
Documents Required to Apply for a Business Loan
Following are the documents required to apply for a business loan:
- Identity Proof (PAN card, Aadhaar card, passport)
- Address Proof (Aadhaar card, passport, electricity bills)
- Bank statement for last 6 months
- Certified copies of Profit and Loss statement and balance sheet for the last 2 years
- Sole Proprietorship Declaration or copy of Partnership Deed
- Certified copy of Memorandum of Association
- Certified copy of Articles of Association
After going through the application process, documentation process, and eligibility criteria of a business loan, you need to be familiar with the factors enhancing business loan eligibility.
Factors Enhancing Business Loan Eligibility
Following are the factors that affect eligibility for a business loan:
- Scheduled Business Plan
A well-organised business plan will make your lenders believe that your organisation is trustworthy and has the capacity to repay the credit amount on time.
- Proper Documentation
Applicants need to keep proper documents handy to become eligible for a commercial loan. If the lender figures out any discrepancy in the documents, they will immediately reject your loan request.
- Healthy Credit Score
Since a business loan is an unsecured loan, the borrower’s credit score is given the utmost importance to determine their credibility. So, you need to retain a healthy credit score of 750 or higher. Having a high credit score will also increase your chances of getting a loan at lower interest rates.
- Steady Cash Flow
Borrowers need to retain a stable cash flow in their business in order to get fast credit approval. A proper cash flow in an organisation displays its availability of ample funds to repay debts.
Benefits of a Commercial Loan
Following are the advantages of a business loan:
- Collateral-free Credit
Being a security-free credit option, you can avail a business loan without offering your residential or commercial properties as collateral. This way, it lessens your financial stress of preparing property papers and thereby expedites the application process.
- Quicker Credit Disbursal
Generally, the turnaround time of a business loan is much lower than that of a collateralised loan. Without the hassle of mortgaging a property and minimum documentation, financial institutions execute the processing of your commercial loan request rapidly, and the loan amount gets credited to your bank account quickly. Consequently, by using a business loan, the capital needs of your business can be fulfilled easily.
- Ample Credit Amount
While opting for a commercial loan, you can borrow a substantial amount of credit to fulfil the working capital requirement of your business firm. This way, you can enlarge your business by enhancing production and sales, collecting raw materials, boosting cash flow, inventory development, hiring workforces, etc.
Now you can understand how to apply for a commercial loan online and its importance in business. So, if a lack of funds stops you from fulfilling your business goals, opt for this credit facility today. However, before availing this loan, visit the websites of different financial institutions and choose the loan offer that suits you the best.
Reference Links:
https://www.businessnewsdaily.com/15807-commercial-real-estate-loan.html
https://www.techfunnel.com/fintech/benefits-of-business-loans/
https://www.creditmantri.com/article-what-is-the-advantages-of-taking-a-business-loan/
https://www.bajajfinservmarkets.in/loans/business-loan.html#parentHorizontalTab1
https://www.patriotsoftware.com/blog/accounting/steps-apply-business-loan/
https://www.tatacapital.com/blog/business-loan/10-benefits-of-taking-a-business-loan/
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