Important Things To Know About Online Business Loans In India

A company’s ability to thrive in today’s market is tied to its ability to make more money. But fast expansion is not possible without adequate funding. If you do not have the finances to support your business ideas, a small business line of credit is the best option for you. Businesses take out a small business line of credit to cover anticipated and unexpected costs. The amount of money you can borrow depends on your business’s size and growth prospects. Here are some important points to keep in mind if you want to take advantage of a business line of credit in India.

What is a Business Line of Credit

A business line of credit is a sum borrowed from a bank or other lender to grow a business. It means expanding the financial well-being of a company through various means. This includes increased investment, business development and so on. This funding is useful for firms because it allows them to meet their current and future growth needs right away.

Why Do You Need a Business Line of Credit

To help your company grow, consider applying for a business line of credit. You can invest the funds in certain areas such as new machinery for expanding facilities, hiring new staff members and more. You can also use the money for the management of regular operating expenses. A business line of credit is very useful for maintaining productivity and capitalizing on opportunities. Hence, India’s SMEs still rely heavily on the banking industry for their funding needs.

What is an Online Small Business Line of Credit or Business Loan

A small business line of credit is a viable alternative for financing a company. But, it can be difficult to secure for several reasons. Business loans are now being processed and dispersed digitally by NBFCs and direct selling agents. Online applications and approvals mean you can get the money you need from your home or office. Getting a small business line of credit for a business online has become increasingly common among entrepreneurs. This is because banks have stringent requirements for business loan applicants and collateral.

Benefits of Online Small Business Line of Credit

These are the benefits of taking a business line of credit for new businesses:

1. Quick and Easy Application Procedure

With an online business line of credit for new businesses, avoid the hassle of filling out long applications. The application is short and can be completed entirely online. You can submit the form and any supporting documentation online.

2. Flexible Tenures

Paying back an online business line of credit for new businesses is simple since you can adjust the terms to suit the borrower’s needs. A small business line of credit for new businesses has terms ranging from one year to five years but this can vary depending on the lender.

3. Flexibility

There are no restrictions on how funds can be used from the business line of credit for new businesses. Instead, you can spend the money you borrow on anything that helps your company grow. For example, online lenders offer various types of business loans including capital loans, lines of credit, equipment and term loans.

4. Top-Up Loan Facility 

If the amount you borrowed is not sufficient to cover all your expenses, you can receive extra money through the same business line of credit for new businesses through the top-up loan service. The bank will merge this new business line of credit for a new business with your existing balance on that account and you will simultaneously repay both.

Eligibility Requirements

To be eligible for a business line of credit:

• You must be between 21 and 65 years of age
• Your business must be a minimum of 3 years old
• You must be an Indian citizen or resident
• You must be self-employed under any of the categories:
  • Business owner
  • Sole proprietor
  • Partner of a partnership firm
  • Promoter/director
  • Doctor
  • CA
  • Architect
• You must have a CIBIL score of 750 or more

In addition, some banks also require you to either have a minimum annual revenue or own at least one property.

Documents Required

Here are the documents required for an online business loan:

• ID proof documents
• Address proof documents
• PAN card
• Proof of business ownership
• Company’s financial documents
• Bank statements and other financial statements

Application Process

You have the option to apply at your nearest bank branch or online. Once you obtain the application form from your lender either in person or on their website, make sure you fill out the form accurately and that all the information you enter in the form matches the information in your documents. Attach or upload all the supporting documentation and submit the form for approval. Once your business loan has been approved, the funds will be transferred to your bank account.

How to Ensure Loan Approval

Consider the following recommendations to ensure your small business line of credit is approved:

1. Maintain an Excellent Credit Score

If your credit score is high, it shows that you are responsible with your money and are less likely to miss payments. Yours or the founder’s credit history determine the business line of credit eligibility. The company’s payment history is also important. Loan eligibility and interest rates are both improved with a credit score of 750 or higher.

2. Show a Strong Cash Flow in the Organization

The lender will examine your business’s cash flow estimates to verify if it is adequate for the loan amount you are requesting. Past filings and other financial information will also be examined.

Conclusion

You can take a small business line of credit for various reasons. For example, to start a new business, grow an existing company or pay bills. There are several perks related to a small business line of credit. These perks enable the founders to run their companies. They also help the founders show their potential. But, you must apply for a business line of credit online only after carefully weighing the pros and cons. For more articles like this one, visit the Piramal Finance website and receive more detailed information and guidance on a business line of credit.