Unlike earlier, now getting loan to fund a business is easy. Many banks do provide business loans to start new ventures or companies which need working capital, expansions, new purchase etc.
To start any business or company it requires finance which cannot be completely funded from the personal savings or funds or from friends.
So one can always look up to bank when in need of finance. However, there are not many banks which provide loans to start ups but only to per-existing business entities.
Here are things to consider before approaching bank or institutions for business loan. Individuals should have a clear business plan or fine print ready with details such as:
- Financial objectives of the company
- Business plan, promoters background, revenue model
- Nature and size of the business
- Growth and expansion plans
- Capital market trends
- Government regulations
- CIBIL Score
The detailed plan should be such as that the banker should be convinced about the project and promoters and should have confidence that you will be able to pay the interest on time.
Simple Steps on how to approach bank:
Approach a bank with written business plan. Individuals can hire business plan writer if needed. Sanctioning of the loan and amount will depend on your business plan, and how well you can earn and pay back the interest.
Each lender or financial institutions have their own criteria while disbursing loan. Do a research on your business area, competitors, see to it you meet to qualify for a small business loans. Check financing schemes from various banks and institutions.
There are some required guidelines which needs to be considered for Micro, Small & Medium sized businesses.
Keep all the documents ready. If you can avail secured business loan by providing a collateral, it will be easy for the bank to sanction the amount. As it will be back in case if you default.
On submission, it is upto banks or institutions to approve the loan and amount.
Start up companies or new ventures can avail term loan or working capital or asset backed loans depending on the needs and business requirement.