Finance is the core requirement for any business to carry through with their daily operations, organizational objectives and what not.
Imagine running a business and being unable to have access to this basic requisite. Thanks to the idea of ‘Business loans’ that bust the problem of credit scarcity and facilitates easy procurement of funds in a short time.
Amongst the various advancements in the developing techno finance sector, loans have emerged as one of the most popular and chosen medium of acquiring credit by businesses worldwide. Every type of firm ranging from SMEs (small and medium enterprises) to Big MNCs (multinational corporations) opt for business loans to achieve their different motives.
On a broad scale, there are many distinct ways to resolve the financial demands of a business. A Business loan is one such provision that comes under the ‘debt financing’ category.
To have a clear understanding of how loans and debt financing as a whole work, we need to understand the idea of borrowing funds and their conditions of repayment. In case of business loans, you can reach out to the banks or other financial institutions and apply for a loan requirement. A specific rate of interest will be charged from you and the loan will be granted after the banks or the respective institutions find it satisfactory to approve.
So, what are the factors that make your loan request approvable?
The prime factor that decides your approvability is certainly the profitability of the enterprise or the annual income (ITR) that it makes .For instance, an annual income of over 2 lakh for consecutive 2 years is considered mandatory for successful approval of the loan.
Credit score is yet another major parameter that determines your creditworthiness.If you are a credit card holder, then a 700+ CIBIL score can land you into an abundance of business loans to choose from. Same applies with the other factors like the amount of revenue that the firm generates annually or even the duration by which the business claims to repay the given loan amount.
Apart from the big firms which can avail the loans comparatively easier on the basis of their progressing profits and growth; there are some popular government schemes as well that can help the smaller enterprises utilize the facility of business loans. These include The MSME business loan, NSIC, CLCSS scheme and MUDRA loan facility amongst the many others.