Requirements For a Business Loan Explained

Requirements For a Business Loan Explained

When it comes to the eligibility criteria for procuring a business loan, most lenders have their own set of rules and regulations. However, there are some basic requirements that are standard to all institutions. In the case of banks, the requirements can be pretty stringent. Banks are very mindful about who they give money out to and this is largely based on their myriad conditions for eligibility.

For an established business owner, fulfilling all the requisite norms aren’t usually a problem. It’s the small and relatively newer business owners who sometimes find it difficult to meet the eligibility list. In this case, small businesses should best explore the option of non-banking financial institutions when it comes to raising funds.

Requirements for a business loan with non-financial institutions:

As mentioned above, the requirements for a business loan application with non- financial banking institutions is rather reasonable. Especially when compared to banks. One of the leading non-banking institutions that give money to small businesses is

Most non-banking institutions realize that it is difficult for a small business owner to come up with detailed documentation and financial records for more than a year.. Keeping this in mind, the bare minimum requirements are decided upon accordingly. For e.g. at, for a basic straightforward loan, the below mentioned are the requisites:

  • Government authorized business registration proof
  • Bank statements for all bank accounts that are linked with the business and of the business owners
  • PAN details of the business and stakeholders involved

Quite evidently, this is the bare minimum that any institution will need to verify and review before considering a business eligible for a loan. Institutions such as, in supporting the smaller businesses also end up exposing themselves to a higher risk.

In addition to what lists, requirements for a business loan can include a few more things that can be asked for. These include:

-Income tax returns: In some cases, the applicant is required to furnish the details of income tax returns for the last two years. This is usually in a case where the turnover of the business is over one crore. While applying for a business loan with, the same applies.  

-Business Plan: The lender ideally wants to know what the money is going to be used for. For this, a dynamic business plan is a must. Whether money is required for expansion and scaling up or to purchase equipment and assets, all of this should be detailed into the business plan. In fact, submitting a strong business plan goes a long way in securing a loan easily.

-Cash flow: When it comes to requirements for a business loan, stability and management of cash flow are reviewed by lenders. This helps them to establish the credibility of the business as well as the stakeholders involved and their expertise in running the business.

Other than the requirements mentioned above, some institutions might have extra points to validate a business. In most cases however, non-financial banking institutions work with the business owners and help make processing the loan easier. Once the documents are submitted and basic eligibility is met, the loan approval process as well as the disbursal of the money is reasonably quick. This adds up to a huge benefit for a small business owner.


Category Business

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