By | 13/12/2016

Most of the Indians belong to the middle class and upper middle class. Loan offered by the banks/financial institutions to business establishments, in order to put business back on track is the Business Loans.

Points To Be Taken Care While Taking Up Business Loans in India:

Understand Your Requirements: Before taking up the business loan, understand the reason for taking up business loan. Revolve your activity around the goal you want the loan for and use money in a logical manner in India.

Calculate Exact Money: You must calculate the exact money required for achieving your goals. Asking for more money, the business loan can get rejected in India.

Full Details of Loan: You must get complete details of the loan like rate of interest, repayment modes, whether it suits you or not.

Do an Introspection: You must do a research on yourselves, and make sure to select a best business loan tailored for you.

Select Small Institute: You must select a small firm, having interest in helping customers and gives solutions in India.

Important Documents Required For Business Loans in India:

Document required for business loans in India are as follows:

  • Application form
  • Balance sheet Xerox of your account statement
  • Aadhar Card, Passport and the Pan Card Xerox
  • Certificate Of Incorporation of Shops, Business establishment and Office
  • Address Proof of MD, CEO, Partner, Directors, Shareholders and Guarantors’ is mandatory.
  • Copy of Partnership deeds
  • Bank statement for the last six months
  • CA Audited Balance Sheet
  • Bank statement must not be more than 45 days
  • Architect Certificate for validating building cost
  • Certified copy of Memorandum of Understanding (MOU)
  • Legal documents (Certified by Director)
  • Xerox Copy Of Board Resolution
  • Proof of Business Continuity Certificate (BCC)
  • Income Tax Returns (ITR)
  • Income Computation Statement for last 2 years
  • Cost of constructing the company
  • Government approved document for pollution, power, building details
  • Firm must be registered for 3 years and above
  • CA Audited Profit and Loss Account details

Advantages of Business Loans in India:

Various Loan Options: Various schemes are present in order to protect business/corporate houses in India.

Banks Available:  Most banks offering business loans encourage instant deposits of money. It can be done through the cheques, ATM, online as well.

Reasonable Costs: Rates for business loans are not costly, and based on criteria like tenure, financial situation and market scenarios. Processing fees and commission are very normal.

Encourage Growth Of Business:   A good business loan play a unique role in managing the day to day affairs/operations, business commitments in a logical fashion.

Suitable Payment Options:  Payment towards business loans can be done by various means like debit card/credit card, cheque, online payments as well. Helps the customers to make payment without any hurdles.

Boost Your Business:  A good business plan play a supreme role in effectively managing operations in a logical fashion. Owner will have great flexibility in using funds, in order to use funds, to expand the business.

Disadvantages of Taking Business Loans In India:

The disadvantages of taking up business loans in India are as follows:

Pathetic Credit Score:  A hopeless credit score can destroy your chances of getting personal loans.

Pay Loan Faster: Even though the personal loans are processed faster, one must pay personal loan faster. Failure to pay the loan, lead to extra charges and will put pressure on person to pay faster.

Frustration:  Small business owners will be frustrated with increasing in the requirement of documents. This spoils their happiness and some many polite refuse.

Preferential Approach: Business loans are ideal for existing customer, having good payment and credit history. A new customer coming to get loans will not get the benefits.

Problem of Pledging: Owner of the company will have to pledge his assets/home to get the business loans. Failure to pay loan on time, means owner will lose control over his/her property.

Entire Loan Not Cleared: Complete loan will not be given to the customer. They will release only partial amount, to check, how a person utilizes the complete amount.

So, I would recommend the person to do effective groundwork before applying for a business loan.

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