Loan Rule: If you are thinking of taking a loan then this news is useful for you. You should be aware of these seven conditions before applying for a loan. If you do not accept these conditions then the bank will return you empty handed. Know in detail in the news…
Apart from this, along with the eligibility of the customer to take a business loan, many other factors also come into play, such as whether you are doing business in any sector, what type of loan product you want to take, in such a situation, applying for a business loan. First you should know some conditions. But what are the conditions for taking a business loan? On what terms do banks give you loan? Let us also know this-
1. How old and strong is the business?
Banks often look at how many years your business has been established, when it was started, how strong it is. What is your track record, etc. Generally, you can get a loan if your business is minimum 1 to 3 years old.
2. What business do you do?Â
In which sector, in which industry you are doing business, this is also important. Banks see which industry your business is related to, and what is the scope of the business in that industry and how much risk is there.
3. What is the annual earning?
Obviously, banks will give you a loan only when they are sure that you will repay it from time to time. The financial stability of your business and loan repayment capacity will decide how much profit you earn annually. What is your financial model, etc.
4. What is credit history?
Banks not only check your personal credit history, they also check the credit history of your business. That means, what loan have you taken in the name of your business, how have you repaid it, all this. If you have been paying interest from time to time, it can increase your chances of getting the loan approved.
5. Are business papers correct or not?
Banks may ask you for documents and financial records related to your business. You may have to provide documents like balance sheet, profit/loss statements, cash flow statement, bank statement, ITR, business license for loan approval.
6. What is collateral?Â
Depending on how big a loan you require, banks may ask you to keep some asset as collateral, such as property or any other asset. Yes, banks take only such things as collateral, whose value covers the loan value.
7. What is Debt-to-Income Ratio?Â
Debt to income ratio is a very important aspect. This means how much is your income and how much debt you have or how much debt you will have after taking the loan. That means the bank sees whether you will be able to handle this extra burden of loan or not. The lower the debt to income ratio, the faster the loan will be approved.
