New Delhi: As of March 2024, there are more than 26.63 lakh registered companies in India, 64% of which are considered active. With so many businesses thriving, access to timely finance is crucial for growth, success, and staying competitive.
However, the extensive paperwork and delays involved in traditional offline lending processes can affect both a business's operations and profitability. To address this, well-respected financial institutions such as SMFG India Credit offer online business loans with a simple application process and minimal documentation.
In this article, we’ll guide you through the steps to apply for a business loan, expected timelines, and tips to improve your chances of quick approval.
How to Apply for a Business Loan
Online business loan applications are typically fast and efficient. Let us take a closer look at the general steps you can expect when applying for online business loans:
Step 1: Decide on the Loan Purpose and Amount
Being clear about your desired loan amount allows you to apply for the precise sum, preventing issues like borrowing too much or too little.
Further, knowing the specific purpose of your business loan helps you choose the right solution, whether it’s a working capital loan or a term loan. This ensures that you can manage your expenses efficiently once the loan is granted.
Step 2: Research Lending Companies
Choosing the right lender is crucial to securing favourable interest rates and repayment tenures. Carefully research various lending institutions before deciding where to apply for a business loan.
Select a reputed lender based on factors like online reviews, available loan options, interest rates, and associated loan charges such as processing fees that can affect the overall loan cost.
Step 3: Check Your Eligibility
Make sure you are thoroughly familiar with the eligibility requirements of your lender. While these vary, here are the basic criteria you can expect at SMFG India Credit:
Eligible Entities: Self-employed individuals such as chartered accountants and doctors, proprietors, private limited companies, and partnership firms working in manufacturing, trading, or services.
Applicant Age: You must be at least 22 years of age at the time of application and not older than 65 at the time of loan maturity.
Business Age: Self-employed individuals must have a business that has been operating for at least 3 years, with stable income and profits for the last 2 years.
Turnover: The annual turnover of your business must be at least INR 10 lakhs.
Profits: Your annual profit must be at least INR 2 lakhs, exclusive of taxes.
Creditworthiness: The applicant’s CIBIL score must be at least 750.
SMFG India Credit also offers an online business loan eligibility calculator to help you estimate the loan amount you can potentially borrow.
Step 4: Collect All the Relevant Documents
Applicants need basic KYC documents, income proof, and business documentation to apply for a business loan. Below is a general list of documents required:
Proof of Identification: PAN card of the applicant as well as valid identity proof for a company / firm.
Proof of Residence: Electricity bill, Ration Card, Voter ID card, Passport, Driving License, etc.
Proof of Business Continuation: ITR, Trade licence, etc.
Proof of Income: Balance sheet, profit and loss account for the past 2 years audited by a CA.
Bank statements for the past 6 months.
Step 5: Fill and Submit the Application
Open the online business application form of your chosen lender. Carefully enter the requested details and upload all the required documents.
Depending on the lender’s policies, your eligibility, and the documents submitted, you’ll receive an instant decision on whether your application will proceed further. A representative from the lender may reach out to you for the next steps in the process.
Once approved, you’ll be offered a loan amount and interest rate customised to your profile. The approved funds will be disbursed once you sign and verify the loan agreement.
Please note that given above are basic eligibility criteria, loan application & disbursal process, and documentation requirements. The final eligibility, processes, and the required documents will depend on several factors including the lender’s policy at the time of loan application.
What Are the Usual Timelines for Business Loan Approval?
Online business loan approval involves various stages of verification for the lending institution to make an informed decision. The exact processing period depends on several factors, such as the lender’s policies, your creditworthiness and eligibility, and the accuracy of your application form and submitted documents. Offline business loan applications may require additional time for processing due to more manual steps.
Trustworthy lending institutions strive to make the process as fast and efficient as possible to ensure that your business can access funds without undue delays. For instance, at SMFG India Credit, if your business loan is approved, the funds are typically disbursed to your account within 72 hours.
Tips to Get Quick Business Loan Approval
Follow these tips to increase your chances of quick business loan approvals:
Cross-Check Your Details: Submitting inaccurate information or outdated documents can lead to delayed approval or even rejections. It is best to proofread your application before submitting it.
Maintain a Good Credit Score: A higher credit score increases your chances of quick approval and favourable terms. Aim to maintain a score of at least 750, as this is often viewed positively by lenders.
Keep Your Business Financials in Order: Ensure that your financial records are up-to-date and accurate to increase your financial credibility. Additionally, having a clear business plan that outlines your goals and reflects the potential for success can increase lender confidence in your application.
Summing Up
Online business loans offer a convenient solution for enterprises to access the funds they require for growth and success in a timely manner. By understanding the steps involved, preparing documentation beforehand, and choosing a reputable lending institution, you can increase your chances of securing a quick business loan. Remember to maintain accurate financial records and a strong credit score to further strengthen your application.
T&C apply. Please note that final approval, loan terms, and disbursement process may vary based on lender policies and borrower’s eligibility.
