Business loan

5 crucial questions before applying for a business loan


New Delhi, Delhi, India:
After working hard and long to come up with a viable business plan, the last thing in getting started is financing. The first thing that comes to mind then is to take out a business loan.

While there is nothing wrong with this thought, there are several issues with debt to begin with. To make sure that your decision to borrow money is fair, you need to answer five important questions:

1. Is the Business Loan Really Necessary?
As mentioned earlier, a Commercial loan has many implications. Therefore, consider all the angles before opting for it. If there are untapped sources of personal finance, the loan may not be necessary. Going into debt when a better option is available won’t make business sense, so consider all financing options before taking out a loan. For example, family and friends might lend money on friendly terms or without any interest. Or angel investors can lend on more favorable terms compared to conventional lenders.

If funds are required, depending on the need, one can opt for a term loan or a line of credit. The precise amount needed to maintain the cash flow of the business could also be decided. If these questions are answered, he can ensure that the debt and its repayment stay under control.

2. What will the interest rate and the total cost of capital be?
It is essential to know the interest rates of the business loan and the cost of capital. A short term loan attracts higher interest rates than a new business may be unable to handle. Some lenders offer monthly interest rates, so insist on knowing the annual rate as well.

In addition, the processing fees and other charges must be clear before receiving the loan to know the exact amount to be repaid and the late payment fees, thus avoiding unpleasant surprises afterwards. These factors will also help in deciding on the lender offering more favorable terms. To get an idea of ​​the interest rate and the total amount to be repaid, a business loan calculator is the most useful. If these factors are ignored, borrowers might find it difficult to pay EMIs.

3. How much should I borrow?
Determining how much to borrow will depend on many variables such as existing funds available, when the money will be used, estimated gross annual sales, etc. Proper analysis of fund requirements is vital, as lenders will ask questions about these issues before approving a loan.

4. Will there be an in-branch assessment after the loan application?
Whenever one applies for a business loan (or any other type), potential lenders will assess the applicant’s credit history and creditworthiness through a credit bureau. A superficial investigation initiated by the borrower himself is considered a soft inducement and does not affect the credit rating. Conversely, a detailed request from one or more lenders is recorded as an investigation in the office records and too many of these requests can impact a borrower’s credit rating and be qualified as hard assessment.

Avoid a harsh appraisal as it can affect the prospects of getting a business loan – or getting approved on favorable terms – in the future. To do this, only apply to one lender, when the eligibility criteria are met. Also, before applying for a business loan, make sure you have a healthy credit rating to increase the chances of approval. This can be achieved by paying off past debts and / or ensuring that all EMI payments are made on time.

5. What does the credit history and score look like?
As pointed out above, credit score and history could make or break the chances of getting a business loan. Or receive the business loan on more favorable terms. Since lenders will check both personal and business credit history as well as score, loan applicants should verify details before contacting a lender. Personal and business credit history can be checked through a credit bureau. Banks, credit card companies, and financial platforms such as Paisa Bazaar and Policy Bazaar also provide free credit history reports. The higher the credit rating, the greater the chance that the business loan will be approved on favorable terms.

Business loans in just a few clicks
Now that these questions have been answered, the necessity and amount of the business loan would be evident. For aspiring entrepreneurs (and others) who do not qualify for a business loan from traditional lenders, Clix Capital is always here to meet their needs, big or small. These can include working capital needs, expansion plans or more.

As an unsecured credit instrument, business loans can range from 5 lakh INR to 50 lakh INR. These loans include business term loans and working capital loans. The former finances investments for expansion, purchase of tools / machinery and related needs. The latter can be used for various purposes such as funding daily business expenses to free up internal burdens for other purposes.

To be eligible, a candidate must be at least 21 years of age at the time of applying and under 65 years of age at the end of the term. The business can be a sole proprietorship, limited liability company, private unlisted company, or partnership company involved in manufacturing, trading or services with a minimum turnover of INR 1 crore. Additionally, audited financial statements should be available for the past two years, with the majority of business routed through the banking system or the past year’s revenue captured through GST returns. Finally, the entity must be a company in activity in its current field of work with a minimum total year of activity of three years. If the questions are answered in the affirmative, a business loan from Clix Capital can be easily used.

The company’s transparent business loan process ensures that after all details are verified, credit can be approved within minutes. Repayment terms can be between 12 and 36 months, depending on the budget and the repayment capacity of the applicant.

The only documents needed are proof of address and identity, financial statements, and proof of business ownership. Therefore, it is time to make sure that nothing comes between a borrower’s business ambitions and their fund requirements – except for a few clicks to qualify for a Clix Capital business loan.

About Clix Capital

Clix Capital is a new era of NBFC that is revolutionizing the lending space by offering differentiated digital lending products that are powered by technology and in-depth analysis. It offers a range of loan products to a diverse range of clients in the MSME and consumer segment, including personal loans, MSME loans, health loans and mortgage finance.

Clix is ​​co-founded by industry veterans Mr. Pramod Bhasin and Mr. Anil Chawla, and is backed by a private equity fund AION Capital Partners Limited (a subsidiary of Apollo Global Management, LLC – the one of the largest alternative investment managers in the world with AUM of $ 433 billion). Mr. Bhasin is the founder of Genpact and the former CEO of GE Capital India and Asia; and Mr. Chawla was the former CEO of GE Capital India and Asia’s Commercial Finance Business.

Together, Mr. Bhasin, Mr. Chawla and AION jointly acquired the commercial lending and leasing business of GE Capital India in September 2016 and renamed it Clix Capital.

For more information, please visit www.clix.capital.