An entrepreneur loan can give your business that much-needed boost effortlessly. Hence, if you think taking advances is not a good option for your firm, you may consider the option again! Moreover, it’s easier to avail loans from various lending institutions now.
You can apply for an entrepreneur loan with Non-Banking Financial Companies like Bajaj Finserv. They provide pre-approved offers with their financial products like personal loan, home loan and business loan, along with EMI financing and other services. Check out these pre-approved offers by giving some details. It’s a simplified process of availing advances that saves your time as well.
However, there are specific rules that entrepreneurs like should follow while applying for a loan with any lending institution. These can help you manage your entrepreneurial finance efficiently.
- Have your contracts in writing
Most businesses are over e-mails and phone calls these days as it’s a convenient way of placing orders. However, make sure to have a formal contract with those clients in writing. You can also ask them for Form 16(a) if they are deducting TDS from their total payments.
Hence, the contracts will be a proof of your income to the lending institutions while you apply for an entrepreneur loan.
- Filing tax on time
You may forget to file the income tax returns on time. It’s a mistake made by many businessmen. However, you realise the consequence when you need a loan from a financial institution.
If you try to file your returns of 2 years or more together before applying for a loan, the lender will reject your application. Hence, appoint a CA who will do the needful for you to make the whole process of availing credit easier.
- Show all incomes in IT returns
Often you are advised to show less income while filing returns to pay lesser tax. However, the lending institution will sanction you a low entrepreneur loan amount if you do so. It’s because they will think you can’t repay the credit amount since you have lesser income. Hence, ask your CA to show your actual earnings while filing your income tax returns next time.
- Importance of FOIR
The Fixed Obligations to Income Ratio is an important factor that lenders consider while sanctioning credits to you. It is your monthly income that goes in paying your debts like credit card bills or any other loans, etc. Paying these dues are your fixed obligations every month.
The financial institution also includes EMI for the current credit that you want to take while calculating the FOIR. It enables them to understand whether you’re capable of paying the EMIs of the business loan you’re applying for with your monthly income or not. Therefore, a low FOIR along with a high credit score can work to your advantage when you apply for a loan.
- Have a considerable business vintage
Lending institutions often ask for business vintage proof as a necessary document when you apply for an entrepreneur loan. They approve advances without collateral when they see you’re running your business for a long time. Your business’ track-record gives them the much-needed assurance of your capability to pay the money back in time.
Thus, you can get your loan without any hassle if you follow these rules. Otherwise, there are usually many reasons to reject your application.
However, you must fulfil the following business loan eligibility criteria to ensure the application’s approval:
- Age – Must be between 25 and 55 years.
- Business vintage – Have to provide business vintage proof of at least 3 years.
- Income tax returns – You have to show the IT return files of the last one-year at least.
- Other documents – Your KYC, qualification certificate, and a passport-sized photograph.
Thus, these are the standard business loan eligibility criteria you need to fulfil when you apply for business loans in any financial institution. However, if you apply with an NBFC like the Bajaj Finserv, you get the host of benefits of a Business Loan besides hassle-free loan approval on submitting the minimum required paperwork.
Receive a pre-approved loan without providing any collateral along with access to a significant credit amount of up to Rs. 30 Lakh. So, without any delay, assess your requirements and submit your entrepreneur loan application online.