With so many banks and Fintech companies offering collateral-free loans, small and medium scale businesses in India no longer have to face problems regarding untimely and inadequate credit. However, the chances of getting a business loan in India are dependent on several factors and having adequate awareness about the procedure and the documentation required can fasten up the process.
The lending institutions follow an algorithm that primarily focuses on ways to determine the potential of the business to repay the loan amount. There have been several uplifting modifications in the processes to benefit the customers. These attempts have improved the procedure by integrating the processes with the available digital alternatives and because of such positive attempts; we are now able to apply for the online business loan. These institutions are constantly trying to make the application process easier for the customers, while consistently trying to reduce possible risk impact on the lending firm.
Being prepared before applying for the no-collateral business loan, can simplify and reduce the overall loan processing time significantly.
The following are the most essential questions you might come across in the loan application process. Having the right answers and a clear objective to these questions will help you immensely.
- How much money does your business require?
It is imperative that you should have an exact amount in your head that is needed by the business in order to deal with the present needs. The amount should be evaluated through a systematic approach. The amount should not be unreasonably high, thereby making the repayment both tough and complicated.
- What do you need the loan amount for?
This is the question that is not only important to the lenders but is also very important to you as the owner of the business. It is true that the lenders do not interfere with the business operations and that the borrower is free to use the money in the way he/she feels is right. But major requirements need to be highlighted and so, project reports and detailed business plans are of great importance.
- What is the repayment plan?
Getting the loan amount is not the end of the story; rather it is the beginning of a new phase in the professional cycle of the business. While applying for the loan, you should have a clear understanding of the repayment plan. You should be able to come up with a realistic plan which is well researched and backed by numbers.
Apart from being prepared to answer these questions, you should also look into the following points:
- Eligibility: One should be aware of the eligibility criteria and if there is any clause that makes your business ineligible, efforts should be made to rectify the shortcoming.
- Comparing the best options: Different institutions might have different plans, requirements and processing period. Comparing all these options and finding out which suits you and your business the best is a wise decision.
- Preparing the documentation: Providing the right set of required documents with correct and complete information will simplify the entire process. The documentation is an integral part of the entire process and hence, you should be well prepared with this requirement. Your documents should essentially include Financial statements, GST certificates, ITR statements, KYC documents.
The following points give an overview of the best way to prepare yourself before you apply for a collateral free business loan in India.
- Before applying for collateral-free loans, determine the amount that your business operations will require over time.
- Also, well-plan the goals to be achieved with the funds you will apply for. And decide on the suitable repayment terms i.e. how and when will be the loan amounts repaid without missing out on the timelines.
- Owners acquiring for loans should fall under the eligibility criteria of the loan provider and look for the various options available in spite of settling down on the first come first serve basis.
- Once the loan plan has been chosen, file up all the documents that are generally asked for or might require for fastening the process.
Staying prepared with all the necessary information and documents will ensure you get an uncomplicated, quick experience while applying for unsecured business loans.