Business Loan is a kind of financing you can avail to meet the business needs of your growing business.
In short if you need funds to expand your business, or you need to buy machinery or boost production then you can opt for business loan.
Different types of Business Loan
Following are the types of business loan and they are as follows-
- Working Capital Loans- When there is a need of Short term business liquidity, they need to have an adequate and constant cash flow. Then working capital loans comes in the picture.
- Machinery Loans- When there is a need to purchase a machinery or are planning to upgrade their plants and machinery, so it requires a funds in both the situations. Machinery loans are one of the types of business finance that provides capital for your fixed asset needs.
- SME and MSME Loans- Loans are provided to small businesses owners who are looking to expand their business operations and market each.
Things your Business Loan Application must include-
Whoever needs a bUsiness Loan is required to give an application with their Business Plan. By submitting a business plan to any Bank authority it is easier for them to evaluate whether that business is economically viable business or not and that decides the repayment capacity loan of yours to the Bank. it is obvious to translate your ideas on paper and the bank can see your vision. Here are some of the principal sections to include-
- Executive Summary- an Executive summary gives a short summary of your entire plan. This allows banks and other lenders to evaluate the economic viability of your business.
- Business Description- After Executive Summary, them comes Business description. Make sure that it includes all the main aspects of your business.
- Human Resources- It is important for a business before seeking for business loan that they have a strong team behind the business. Principle this should include the profiles of the executive team which includes, CEO and CFO and anyone else involved in the higher level. Make sure to add their previous achievements to demonstrate their ability to run their business.
- Budget and Finance- this is one section that bank will scrutinize in every possible detail. While the idea is important to them they really want to see that how much you want to invest, what your regularly expenses would be and how will you be making revenue.
- Promotional Plan- lastly, it should include the Business or Promotional Plan. how will you get you services or product out there.
Supporting Documents requirements-
Following are the supporting Documents that are needed-
- Identification
- Bank Statements
- Proof of address
- Business Registration Documents
FAQs
- What are the things which you need to know before applying for a business Loan?
Prior to starting you application with Bank, it is always advisable to be well prepared. Here are the following things which you should consider before submitting an application
- Check your credit rating- A large portion of investors decides to give loan to you by checking your CIBIL score. So before applying for the loan it is a good idea to check your credit score.
- Every time you apply for a loan, your credit report registers this. If you have too many applications then your credit score could go down. So the best option is to shop around first before submitting an application.
- Lastly, you should consider hiring someone to help you with the application process. Often times business owners are really good at their side of the business or are not the best at Finance and writing. The business plan is an essential section in your application, so it might be a good idea to have someone help you out in writing of the business plan. It may also be helpful to hire a finance analyst to aid with the budget section of your Business plan.