Business Loan
All kinds of business enterprises like sole proprietorship, partnership and private limited companies, will be in need of a loan at various stages for either a short time or long term basis. Hence it is an important factor to make a review of the financial conditions and their business outcome, so as to know if a business requires a loan and the capacity to generate the capital to repay the loan. Thus any business enterprise will have a set of standards or eligibility criteria, which it must satisfy for availing a business loan. This eligibility criterion may vary for various enterprises as well as for different banks.
Key factors affecting your business loan
Generally the following factors play a vital role in applying for a business loan.
- Stable and Sustainable business: The individuals who apply for a business loan must have run their business with a stable income for a minimum of 3 years.
- Age of the owner: This factor determines the repayment capacity of a business owner. Generally loan is offered to self employed individuals or business owners between 21-65 years of age.
- Financial Statements: The present and previous financial statement of the company must show continues progress. In case of any instability or mismanagement your business loan might get cancelled.
- Pending EMI’s: Any outstanding EMI’s at the time of your application for a business loan may reduce maximum amount of loan or may even lead to cancellation of loan.
Eligibility criterion for application of a business loan
The following are the eligibility criterion that must be met by every business enterprise in the case of application for a business loan.
- Types of Concerns:
- Partnerships
- Sole Partnership
- Private Limited Companies
- Uncategorized Public Limited firms
- Income Requirements:
- The net income of the partners or the sole income of the business owner must be above a certain fixed value based on the type of your concern.
- This value may change for different loan lenders.
- Required turnover:
- Must meet the minimum turnover value fixed by the bank for your concern.
- Age of applicants:
- Minimum age is 21 years and the maximum age at the time of maturity of the loan is 65 years of age.
Recommended Read :
- What is a Business Loan?
- Pros and Cons of Financing Business With Personal Loan
- What is Overdraft Facility How to Use it Wisely?
- How to check your CIBIL Score?
- What is CIBIL Score?
- What is Credit Appraisal?
- What is Credit Rating?
- What is Good and Bad Credit Record?
- What are Credit Rating Agencies?
- Importance of Foir in Loans
- Are You Eligible for Home Loan
- Tips to Increase Your Home Loan Eligibility
- How to Get a Home Loan With Low Income?
- How to Get Home Loan With Bad Credit?
- What is Unsecured Personal Loan?
- Difference Between Secured Loan and Unsecured Loan
- What is a Business Loan Types of Business Loans?
- What is Personal Loan Eligibility and Benefits?
So, is this type of loan suitable for start ups as well? If I have a good business plan and all the associated eligibility criteria are met, can I get a business loan to start a new business?
It seems as if business loans might be more suitable for an already established business than a young person only just starting up. I’ve read a few articles about crowdfunding and venture capitalist/venture debts, so maybe I’ll go and re-read those for more information. See what is most suitable to start my business.