Business loans are one of the most commonly availed financial products. With the Indian economy shifting towards free-market liberalization, business loans are now considered as a preferred mode of investment. Numerous micro and small enterprises avail such loans to boost business growth.
Bihar’s economy is mainly service-based. Some portions of its economy are also based on the state’s agriculture. The upcoming growth of the industries in the state has led to a high demand for business loans in Bihar.
Numerous financial institutions provide hassle-free business loans, which are beneficial to the customers to improve their business in many ways. You may use it to meet all your business expenses, including office renovation, hiring staff, business expansion, among other things.
Features of business loans
- Meet all the business loan eligibility criteria
When you will be applying for a business loan, you will find that Business loan eligibility vary between lenders. Leading financial institutions necessitate only some basic criteria:
- Borrowers must be between 25 to 55 years of age.
- A business must be functioning for three years and above.
- A company must have an income tax return filed for not less than one year.
2. An effective business plan
Business owners must produce an effective business plan to ensure the approval of their loan. In a business plan, the owners must describe the products/services they sell their current position and target market. But once you get the ball rolling and you see some money coming in regularly each month, you’ll know you did the right thing. If you need a more immediate solution, see how a car title loan could help you get the funds you need.
If you want to present a clear business plan, then you must include the aspects given below:
- SWOT analysis of the company: It helps to analyse the strengths, weaknesses, opportunities and threats of the company.
- Industry analysis: It is usually done through PESTEL analysis to identify the external environmental factors that are beneficial or threat to the company.
- Strategies for sales and operational plans: It enables the company to increase their sales and earn high revenue.
Failure to present a sound business plan is one of the primary reasons for loan rejection. There are both advantages and disadvantages of taking loan.
3. Provide all the necessary documents
In order to apply for a business loan in Bihar, one must present some essential documents, which should be provided by the borrower to make the loan approval process easy and quick. The vital documents required by NBFCs to proceed with the loan application are provided below:
- KYC documents such as Aadhaar card, voter ID card, passport, etc.
- Certificate of business existence such as GST registration certificate, and income tax return.
- Appropriate financial documents like and balance sheet and P&L Account statement.
- Lastly, a passport-sized photo of the borrower.
4. A high credit score
A good credit score is necessary to apply for unsecured loans. Applicants must maintain a credit score of 750 or above to make the approval process quick and easy.
One must ensure that they have paid all their past dues and cleared credit card bill for maintaining a higher credit score. An applicant’s CIBIL score portrays his or her expertise level in finance management. There are some practical ways which will ensure your credit score is above 700.
Following these points will ease the application process for borrowers applying for a business loan in Bihar. A person can receive a high business loan amount of Rs. 30 Lakh after the verification of documents, for which NBFCs take around 24 hours.
How to Maintain a Good CIBIL Score for Loan:
The CIBIL score is the first aspect evaluated by your lender to determine your overall credit-worthiness. If you are thinking of an ideal CIBIL score, you should naturally know how to improve credit score. You should strive to maintain your CIBIL score like a pro in order to increase your chances of securing loans. You should strive to have a credit score of at least 750 and above. To maintain a healthy credit score, you may keep remembering the below points. Definitely these will be proved as been to you to increase your CIBIL score.
- You should make sure that you use a maximum of 50-60% of the limit on your credit cards.
- Do not default on credit card/home loan repayments and pay in a timely manner.
- Do not take on a high number of loans and avoid a larger number of unsecured loans and credit cards in your name.
- Always take the no due certificate from your lender when you close a loan or credit card account.
- Apply for a fresh loan only after an interim period of 6-9 months.
- At the time of repayment, avoid the late repayment. It impacts a negative image of yours towards your lenders
- One needs to review its CIBIL report on a regular basis. Many times it has been found that there could be errors in your report, which you have to fix through an appeal.
- One should avoid applying for a credit concurrently, because multiple enquiries from different lenders impacts your credit negatively as it projected the hungry behaviour of user and increase the chances of loan rejection.