Is It Tough to Sanction A Loan In India?

There are several types of loans in India offered to the entrepreneur or business. However, it is not possible to be eligible for every type of loan. It is always best to go for a secured loan which requires you to mortgage loan against property. In this given article, we will discuss whether it is tough to secure a loan in India.

Types of Business Loans in India.

We will be discussing few types of business loan offered in India:

1.  Start-up business loan

This can be availed in a bank or a financial institution to raise the initial funds for your business. Since this loan is specifically for a start-up, you need not require a lengthy credit history. To be eligible for this loan, you need to have an excellent credit score and the minimum annual income of the business should be at least INR 2 Lakhs.

2. Business Loan for Women

This type of specialized loan is only provided in a few financial institutions; it is an initiative by both the government and financial institutions to encourage female entrepreneurs to establish their business.

3. Loans for small-medium enterprise (SME)

This type of loan is extended to small to medium enterprises. To qualify for this loan, your business should at least be operating for 3-6 months.

Some Tips to get your Loan Approved

1.  Credit History

Ensure that your credit history is good, highlighting the timely repayments of dues and your credit score. Because ultimately, when you apply for a loan first thing a lender is going to check is your credit history

2.  Cash Flow

When you are applying for a loan for your business, the lender will consider your cash flow and roughly estimate whether you can repay the dues on time. Cash flow is one of the important aspects of sanctioning a loan because, ultimately, no one wants to give a loan to a business that doesn't have much credibility.

3. Business Plan

To get a start-up loan, it is important to outline a detailed business plan with a well-thought follow-up and contingencies. This point is sure to attract many investors and improve the chance of sanctioning the loan.

4. Over-dependency on loans

Getting a loan is one of the ways to increase funds for your business, don't get too dependent on it and apply for too many loans, because ultimately, at one point, you won't be able to apply for the one when you need it. Getting secured from a legible source will require a thorough background check on check.

5. Methodological

One way to show or express to the lender to sanction a low is to be methodological and prepared with every possible document that they may require. This simple behaviour ensures them that you are a reliable person, which increases your chance of sanctioning the loan.

Conclusion

The bottom line is you require a good credit history and a clean background backed with a stable turnover to secure a loan in India. With the ease of technology, you can apply for a business loan online apply, facilitating a speedy process.

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