Looking for a business expansion but are unaware of the application process or which business loan to pick? Don’t worry. Go through the following article to understand how you can apply for a business loan. But before talking about the application process, let us first understand the different types of business loans.
Types of Business Loans:
Business loans are available in customised form. There are different types of loans for your different business needs. Therefore, before you apply for a business loan, first know about their types.
Term Business Loans:
You can apply for a business loan (term loan) if your requirement is low and you need funds for a shorter period of time. Term loans are available for the amount ranging from Rs 5 to Rs 25 lakhs. The maximum repayment tenure of this loan is 36 months. In addition to that, the lending institution provides a flexible repayment option, and you can choose the term that best suits your budget.
Equipment and Machinery Loan
To stay afloat in the dynamic business environment, you need to upgrade your technologies, plants, and machinery. If you are in the manufacturing or production business, upgrading your equipment and machinery becomes even more crucial. However, installation or replacement of heavy equipment requires a sufficient amount of funds. In this scenario, the customised equipment and machinery business loan comes to your rescue. The business loan interest rate in such a type of financing is significantly lower. This is because, in the event of default, the lender has the right to auction the purchased equipment to recover their losses.
Working Capital Loan:
If you are looking to apply for a business loan to meet your operational expenses, the working capital loan is ideal for you. Such a type of business loan ensures that you have sufficient funds to meet your short term business expenses such as electricity bill payment, inventory purchase, clearing bills payables, among others. In addition to that, the working capital loan allows entrepreneurs to maintain positive cash flow.
Business Line of Credit:
If you are looking to apply for a business loan that is flexible in nature, a business line of credit is an ideal option for you. Under this form of business loan, the financial institution parks a certain amount of funds in your account. And you can use that fund as and when needed. The terms and conditions of this loan are predefined. A business line of credit is ideal for salary or wage payment, inventory purchase, and so on.
Business Credit Card:
Just like a credit card that you have to meet your personal expenses, financial institutions also provide customers with an option to apply for a business loan in the form of a credit card. The card is ideal if the businesses are in urgent need of cash. Another benefit of having a business credit card is that if you pay your dues on time, the lender may offer reward points that you can redeem on your next business purchase or payment. However, remember such a type of card comes with a high business loan interest rate.
How to Apply for a Business Loan?
So, you are now aware of the different forms of business loans. It’s time to become familiar with the application process. Lending institutions gives entrepreneurs an option to apply online through the lender’s official website or apply offline by visiting the lender’s branch or outlet or their registered DSA.
How to apply for a business loan online?
In order to apply online, follow the steps outlined below.
- Conduct a thorough comparison among different lending institutions.
- Go to the official website of your selected lending institution.
- Review your preferred lending institutions minimum qualifying criteria and documentation process.
- Fill in the online application form.
- Submit the mandatory documents.
- Post submission, if your details match the lender’s requirements, one of their representatives will call you to obtain additional information.
- Once the lending institution completes the evaluation process, the funds will be credited to your account shortly.
How to apply for a business loan offline?
In order to apply offline, follow the steps outlined below.
- Compare the business loan interest rates with various lenders.
- Visit the branch or outlet of your preferred lending institution.
- Discuss your requirements with the lending institution’s representative.
- Post discussion, choose the type of business loan that best fits your requirement.
- Request an offline form and fill in the same.
- Complete the documentation process.
Following the submission of all your details and documents, the lending institution will perform risk profiling. And if they are satisfied with your application, the lender will disburse the amount shortly to your account.
Initiating your loan application is not a tough task. However, before you apply for a business loan, you must assess your requirements thoroughly.
Read more on KulFiy
What is a Top-Up Loan? Know Its Meaning & Purpose