There are many small businesses who like to operate debt-free. They are debt-averse and find the act of applying a business loan intimidating. However, a simple fact of a successful business is that ‘You Need Money to Make Money’ and taking a business loan can give a timely boost to expand and grow your venture. Once you start a business there are many occasions to take a business loan. A business loan can help in increasing working capital, purchase of equipment and inventory, expanding products, services or workforce, buy insurance, advertise or to take advantage of a new business opportunity.

As a business owner, there are a few things you need to understand and practice, before starting the application.

1. Preparing your finances and understanding your options
   The process of applying a business loan is easy. It is all about organizing your finances, understanding your requirement and knowing your options. You should have a broad idea of your loan requirement, know what type of business loans are available (secured or unsecured), the terms and conditions associated with it, and the process of applying. It will help you make the best decision going forward.

2. Maintain all documents
   Once you know the purpose of your loan, the next step is to organise and maintain all documents required to apply the loan. PAN, Aadhar card, Passport, Voter’s ID and Driving licence are the basic documents required followed by ITR and bank statements. You should also maintain PAN for the company and provide income statement, balance sheet and P&L account for the last 1-2 years. All financials should be certified or audited by a chartered account to add legitimacy to the documents. Trade Licence, GST credentials, as well as Sole Proprietorship declaration or certified copy of Partnership Deed if relevant may also be required.

3. Think like a lender
   Revisit your loan purpose and desired amount. Your loan purpose should be legitimate and desired amount should be realistic or else it could affect the loan process. Personal credit score plays an important role to make a credit decision so it’s advisable to check your credit score before starting the application process. Build a business history as lenders want to know if your business is making enough for you to pay back the loan. Your business should ideally be profitable for last 1-2 years. Higher annual revenue, average bank balance and profitability of your business will give comfort to the lender.

4. Keep your collateral ready for secured loan
   While unsecured loans are popular for smaller amounts, for loans more than Rs 50 lakh a security is necessary. Few lenders accept stocks, bonds, real estate, jewellery, machinery, equipment and vehicles as collateral. It is important to have clear titles ownership of such assets ready in advance as the amount of the loan offered depends on the value of the collateral.

5. Follow best practices
   Review your business loan application to avoid any mistakes that can delay the process. Be truthful and accurate with every bit of information you provide and don’t delay in providing any follow-up information required. Always remember, more information is always better. Once you have followed all steps and made the application, the last thing is to wait and hear back from the lender.

Looking for a business loan APPLY NOW

Navratri is the high-spirited festival where Goddess Durga is celebrated in her different forms across the nation. With her aura, personality and story, goddess Durga does not only inculcates great devotion but has great leadership lessons for all entrepreneurs and business owners. Below are the nine qualities you can learn this Navratri to grow your business.

Learn Introspection from Goddess Shailputri

Shailpurti is the Goddess of Nature who guides us in the journey of discovering our purpose in life. The same goes with any business. You need to introspect the reason for becoming an entrepreneur much before you start any venture. The initial years of setting up a business is tough – arranging capital to build the growth momentum and choosing right financial partner who understands your business vision is critical. Even after you have built a successful enterprise, you need to continuously evaluate your business goals and improvise to best achieve it.

Learn determination from Goddess Brahmacharini

Goddess Bhramacharini is known for her determination. In the initial years of your business, being continuously determined to build a successful enterprise becomes very crucial. Acquiring new customers, arranging capital for growth, managing day to day operational expenses, maintaining high level of service, retaining excellence and being competitive in your offering, all at the same time can lead to burnout. You need to have a right team and partners who equally determined for the success of your business as you are.

Learn Vigilance from Goddess Chandraghanta

Goddess Chandraghanta is known for her knowledge and is very vigilant. To run a successful enterprise, you should have knowledge of the latest trends, be vigilant about the policy change in policies and regulations that impact your business and upgrade technology that will benefit your business.

Learn wealth creation from Goddess Kushmanda

Goddess Kushmanda is believed to bring prosperity and good health to her devotees. A successful business is one which keeps all its stakeholders happy. While you create wealth, make sure your enterprise is built on the foundation of customer centricity. Always keep a check on your employees emotional and financial well-being and ensure that the investments made by your partners and investors are profitable.

Learn compassion from Goddess Skandamata

Goddess Skandamata is a kind and compassionate goddess. Compassion is a key value to run a successful business. A compassionate leader inspires all team members to work together towards the business goals and motivates them to go out of their way and service the customers.

Learn the fighting spirit from Goddess Katyayani

Goddess Katyayani is a warrior goddess. Today businesses are very dynamic and with changing trends, policies and intense competition, you need to adapt your business to face these challenges. You need to learn the art to fight against all odds from Goddess Katyayani to make your business successful.

Learn to overcome difficulty from Goddess Kaalratri

Goddess Kaalratri is known as the destroyer of darkness. While building a successful enterprise, there will always be a phase of volatility where your business growth is unclear. This can be because of changing market dynamics, shortage of funds for growth or a wrong business call. Your stakeholders may panic in such situation. As a business leader, you need to regularly communicate with your stakeholders on your plan of action to overcome this temporary darkness.

Learn grooming and charisma from Goddess Mahagauri

Goddess Mahagauri is known for her luminous beauty and cheerful demeanour. As an entrepreneur, you need to be well groomed and cheerful while meeting prospective clients. You need to build a good first impression of you and your company among all stakeholders.

Learn to upgrade your knowledge and achieve deep skills from Goddess Siddhidatri

Goddess Siddhidatri is known to bestow insights and perpetual wisdom to her devotees. As an entrepreneur, you need to have thorough knowledge of your business and you need to constantly upgrade your skills to develop new strategies to grow your business.

Looking for a business loan APPLY NOW

Of late there has been a lot of technological advancement in the way lenders evaluate applications for business loans. A bulk of the focus has been to use technology to assess the business income of the applicant. There have been several innovations using technologies like big data and machine learning in the recent years.

Like all previous technological innovations, financial services have been early adopters in these areas as well. Now lenders have started using alternate data and social media profiles to build a more comprehensive view of the applicant for a business loan. In India, lenders have always been struggling with the quality of data available for credit assessment for a business loan. So, here are few tips, with which applicants for a business loan can ensure that a potential lender can get a better understanding of their business which can result in, not only faster turnaround on the business loan but can also lead to lower interest rates.

1. Provide documents regarding your business loan income like your balance sheet and profit and loss statement. In case of documents, the more the merrier.

2. As far as possible provide realistic assessments of your business incomes. As a thumb rule, overstating any facts will only delay the decisions.

3. Give the lenders access to alternative sources of your data for example your mobile phone data can be a very rich source, which the lenders can use for arriving at a quick decision on your loan application.

4. If you are able to offer a guarantor for your loan, then a lender will definitely consider your application much more favourably.

With these few simple steps, the chances of a business loan application getting approved with a low interest rate improve significantly.

Looking for a business loan APPLY NOW

Loan is a sum of money that needs to be paid back to the lender as principal along with the interest, but all loans are not same. When Rajesh wanted to start a new business, he searched for a Business Loan. His friend Karthik explained him the difference between the Business Loan and a new start-up loan.

Unique SMEs, unique needs

Loans for SME/Business Loans are usually in the range of Rs 5 lakh to Rs 50 lakh. RattanIndia Finance gives these loans for those who want or strengthen existing business. Basically, any entrepreneur running a small or medium business, like small scale manufacturing, restaurant, trading business can avail these loans.

Normal Eligibility conditions include the borrower to be in the age between 28-65 years running a profitable and stable business for three years, have a record of filing taxes. The loan tenure is usually between 12 and 48 months.

The SME/Business loan interest rate usually ranges from 18% to 24%. The actual rate depends on the financial and business profile.

New ideas, new start-ups

Although Start-up companies can avail term loan or working capital or asset-backed loans based on their requirements, Securing funds for a start-up is one of the toughest challenges an Entrepreneur faces while starting a new business. With a plethora of funding options available, it is important for the Entrepreneur to understand the pros and cons of each funding methodology, estimate the amount of funds required, the application of funds, projected financial position of the business including the returns generated and evolve a strategy – to approach and secure the required funds. With venture capital firms and angel investors enjoying plenty of coverage as a great source of funding for start-up, many Entrepreneurs are unaware that financial institutions and Banks are also an avenue of funding for start-ups. In fact, Banks are one of the largest funders of start-ups in India, providing funding to thousand of start-ups each year.  

To be eligible for start-up loans, the unit must be eligible and certified as a 'Start-up' by the concerned government authority as per Start-up India scheme. Such loans, given for up to Rs 5 crore, are given to finance for innovation, development, deployment of a new product, processes or services etc.

There are also start-up loans where the loan is given in form a line of credit (LC) or for equipment financing. For Line of Credit, if no security is required, interest rates are generally higher. In the case of start-up, loans given for the equipment financing, the equipment and tools used for Business are pledged as collateral. Hence, the interest rate would be lower that than no collateral financing.

Points to ponder upon for any business loan

It is important to understand rather estimate your repayment capacity and EMIs when it comes to business loans. Use RattanIndia Finance Financial Tools to help you.

Looking for a business loan APPLY NOW