Finance is the lifeblood of a business. Any business needs an adequate measure of financing to survive, function and grow. Business loans provide financial assistance to organizations to develop and expand by financing equipment, working capital needs, or purchasing hardware to support the business.
Different types:
1.Overdrafts
As its name suggests, an overdraft means an overdraft from your checking account. For this office, you will be charged an agreed interest rate. If you do not overdraw your account, you will not be charged any interest.
2. Term loans
Term loans can benefit here and now, long term or moderate term. Term loans are of two types, unsecured business credits and secured business advances. An anchored business loan requires you to pledge a guarantee with the bank, while an unsecured business advance does not require security/insurance. Secured business cash advances have lower financing costs compared to unsecured business loans.
Bill reduction is a technical money-back moment. You must present bills of exchange, which will be collected for an amount less than the value of the bill. The bank maintains the distinction as a reduction in charges. You must submit imperative records such as applications, freight receipts, etc., that approve trade exchanges.
Letter of credit:
An acknowledgment letter is also called an LC. An LC is a certification letter issued by the buyer’s bank stating that the buyer will honor the fee when the merchant delivers the merchandise and takes the risk as agreed in the wording and offer statements. LC is generally used as part of the universal business.
Yojana Mudra:
Mudra Yojana is a government-launched business loan scheme for small and medium-sized businesses in India. The Government provides funds to the banks and the banks in turn finance businesses in India. Therefore, banks offer MUDRA loans at a lower interest rate, compared to standard business loans.
Eligibility criteria:
1. Who is eligible to take advantage?
– Entrepreneurs or self-employed professionals
– Limited or limited liability companies
– Manufacturer, retailer or service provider
2.Criteria
The applicant must be between the ages of 21 and 65.
– The company must have at least 3 years of existence.
– The business should have been making a profit for the last 2 years.
– Turnover should be at least Rs 40-50 Lakhs per year.
– The minimum profit earned should be Rs 1-2 Lakhs.
Required documents:
– Last 3 years ITR
– Bank statements
– Commercial test
– Certification of practice.
– Recent photograph of the applicant
– Proof of Identity: Aadhar Card, Voter ID Card, PAN Card, Company Registration Certificate, etc.
– Proof of residence
– Other documents such as Declaration of Sole Ownership, Certified Copy of the Company Deed, Certified Copy of the Deed of Incorporation
Association and Articles of Association.
Read more for detailed information: https://indianmoney.com/articles/how-to-get-a-business-loan-from-a-bank