Is it Possible to Get a Business Loan With no Money Down

Apply for Small Business Loans

 If you are on low on the fund, it is absolutely fine to opt for finance from a good financial debtor. But there are some constraints behind getting the financial loans if you’re are not prepared to submit the money down. Although to get a business loan without money is not impossible. There are some financial institutions that fulfill your need to get the business loan with no money down.

 

 What is the concept of “Money Down”?

 

  Most of the business owners like you, always need a constant inflow of money to run their daily day to day operations. To fulfill that requirement they approach many financial institutions to fund their financial requirement. As a consequence, the financial institute finances funds by the means of earning revenue through acquiring interest rates. In addition to that, due to earn money profit the financial institutes’ charge a portion of the fund from them. That amount of money is commonly known as money down or the down payment or processing fee. But you may ask why it is necessary? Actually, financial institutes are financing you. That means they are funding in your bad times. They can charge anything out of their money, after all, they are also doing the business.

 

 How to get the financing without any money down?

 

 Irrespective of the industry it is difficult to get debt fund money, however, you can get the loan without the submitting money down by following the below steps:

 

Purchase a business credit card: 

 

Undoubtedly, purchasing a business credit card for maintaining the daily business requirements is a very fruitful idea. There end number of institutions that are providing the business credit cards. So, thus you can easily acquire business credit cards. Besides that by the extra grated use of credit card, you can boost the credit score too. In the meantime, you need not pay any kind of money. Plus, your continuous transactions in credit cards will offer will many reward points. That you can easily use in the near future

  

Opt for equipment financing: 

 

This is another excellent option that provides money free finance. Generally, most of the financial institutes avoid financing the business person, who lacks cash bank statements. As a matter of fact, when you opt for the equipment financing then you neither need to show the bank account details nor balance sheet of your business.

 

 You can also go for the invoice financing: 

 

Invoice instancing is also one type of collateral that provides loan fun without any money down. 

 

You can go for the government or subsidized loan:

 

 In most of the countries, the government provides a different kind of loan to scale up the industry sector. As a consequence, they advance different kinds of loans and various amounts of loans without seeking any kind of presubmission of cash. Therefore if you want to boost your unit without such prior investment you can approach government financial institutes to fund your business.

 

Definitely, the above-mentioned loan will help you to get loan money without any money down.

All about Small Business Loans

Apply for Small Business Loans

Across all the industries need for finance is a crucial part to operate the business. If you are the owner of the small business, then your need for funding may be higher in comparison to other big players in the market. As a matter of fact, small business owners face several problems at the time of applying for business loans. If you are in the market for the same reason and searching for small business loans, you are the best place. 

 

Probably, you are continuously applying for the different kinds of loans for your small business. Whereas, you do not have the idea of getting a business loan. As a matter of fact, your banker or financial agent renders you only a partial idea rather than providing you a complete factual data about the business. As a lot of small business institutions depends on small business for fueling their initiatives.

 

 Let us understand the concept of small business loans: 

 

 Basically the small business loans are those type of loans that funds a lesser amount of money in comparison to other loans. There are several stages of the loan amount are exist in the market. Generally, the loan amount which is below the ten lakh is regarded the small business loans. On the other hand, the loan is more than ten lakh are often known medium loan. And also, which equals to one crore or more than one crore.  These loans require fewer prerequisites for loan applying procedures. Meanwhile many institutions like the banks offer small business loans. By following the rules and regulations provided by your financial institutes you can easily use the fund money.

 

 What are the perceptions people hold before applying for the small business loan?

 

 Often people believe that getting a small business loan is very difficult to receive. But if you maintain a healthy business and keep healthy cash flow in your account then you can conveniently apply for the small. However, some of the lenders do not provide loans below than ten lakh. But, on the contrary, many new institutes are come up with small business opportunities. Instead of seeking help from those who never helping on the ground, you can easily approach them who is constantly helping you out. Plus when you hold a credit score, then also you get some best advice for applying for the loans.

 

 What is a credit score and how it affects when you apply for business loans? 

 

Lumsump all the lenders will first look into your credit score before giving you the small business. In general, the credit score stands between 300 to 800. This credit score is monitored by the international credit supervising organization.

 

This credit score is an important aspect to get a small business loan. Even your previous loans that you have taken long back and had not paid the installments in the proper time influences you. That. Most importantly your previous delayed installments influence your credit score. Thus it indirectly influences that measure of getting small business loans.

 

Know about your lenders:

 

Today, maximum financial organizations have come with small business loans. Earlier financial institutes hesitated to give the loan to the people. After globalization, many things have changed in the banking industry. Back then, many new private players come into the loan market, due to the fact there are huge profit gain options in this market. However, a few among them do not offer small business loans. But, on the other hand, many new small finance institutes and A Non-Banking Financial Company (NBFC) emerged during this period. Those especially provide small business loans to small business loans. Therefore, you can a lot of options for debiting loans. Hence, you can conveniently apply for the loans for the betterment of your organization.

 

 Why some of the people prefer to go for a small business loan?

 

 Many businesses unit prefers to go with a small business loan. The most crucial reason behind it is that it is very easy to payout. In addition to that, rules and regulations of small businesses more flexible in comparison to others. Moreover, this type helps to stand out in the competitive market. The traditional loans are more viable for high purchases which require a lot of investment. Meanwhile, small business loans often provide gives more benefits to some special parts business. And the parts are likewise:

 

  •  You can take loans machinery, equipment, and other many tools for the repairing, manufacturing, service-related aspects
  •  Even you use the small business units to the real estate, reconstruction, new renovation, expansion of new brands, acquiring the new stocks for your brands.
  • Moreover, you can upgrade your business new technology up-gradation and many more.
  • You buy new pieces of machinery like phone items, computers and many more.

 

 What are the repayment structure of the small business?

 

There are several repayment options that are offered by the many institutes in the market. Yet, every financial institution has a similar type of repayment structure. However, most of the organizations have some of the basic structures to repay the loans. Here are these:

  • This type of tool offers longer tenure of repayment options with lower interest.
  • Most of the institutes provide the facility for repayment structure for ten years for the equipment purchases.
  • Even if it is a real estate purchase, then generally the long tenures go beyond 15 years

 

What are the options you can avail after taking the small business loan?

 

 Balance transfer: If your current lender is charging more money from you than definitely after some time you can shift your loan one bank to another bank.

 Tax benefits: When you shift your debt details in your balance sheet, you can easily avail of some tax benefits by showing the debt history in your balance sheet.

 

 Interest rates: With many new lending options you can easily go for the best interest rates.

 

To sum up the whole article, we have articulated some of the major aspects of the small business. Hoping that you will have all the best of luck to gain business loans.

What does a bank/financial lender look for providing a business loan

providing Business loan

 The bank or the financial lender scrutinizes various aspects before providing a business loan. As a business person, you maybe want to know about the phases of business loans. Or, perhaps, you are thinking about the aspects, which will increase your chances of getting a business loan. Even, in many instances, the people like you, experience many daunting nightmares, when they think the matter of taking a business loan. Well, this article will articulate all the aspects that will give you the overwhelmed idea to get a business loan.

 

Below are the most of predominant requirements for getting the business loan

 

 Credit score parameter: 

 

Lenders or the financial institutes examine your debt history very well before giving you the business loan. In these days, worldwide credit authority measures your credit score. Those people who have at least a 650 credit score, usually get the loans very easily. If you are already determined that you will be applying for a business loan then you must prepare a credit report card.

 

The tenure of your business:

 Another important feature, forgetting the business loan is the age of your business. Maximum business institutes look for the age of the business. Because that shows your ability and dominance in the business. In general, most of the financial institutes hold the criteria of at least two years of business continuation.

 

 Your business’s annual revenue: 

The moment when you apply for a business loan, at that point in time you need to show your annual profit that you earn from your business. Here to mention, different financial institutions have different criteria. Therefore, if you surely require a loan, then ask your lender what is their criteria.

 

Moreover, here are some additional measures that your bank examines to get a business loan

  •  Banks examine your debt and credit ratio:

 Before giving the loan, your banks will check the debit and credit ratio. Debit and credit ratio actually means, the credit risk on your loan amount. Whether you will able to refund the money or not, that matter comes under the debit and credit ratio.

 

    •  Following this, the bank watches out your solvency
  •  They will check your residence status: 

Whether you live in a rented house or you reside in your own house. In fact, most of the lender’s checks whether you are an outstation candidate or not. After all, there are possibilities of fleeing after taking the loan.

  • Banks check your balance sheet
  • Banks check your net flow of income
  • What is  your  intention  for the investment of loan fund

 

  •  Banks check your potential collateral:

 When you are opting for a secured business loan, you need to show your asset estates such as investor’s equipment or real estate.

  • In addition to that, Banks check your loan applying behaviors
  • Banks examines your responsibilities

 

 Unlike other loans, to get a business loan may be a little tough. However, if your business does well, then of course easily you can get a business loan. Hope this will give you a idea about What does a bank/financial lender look for providing a business loan.

Tips For Women Who Want To Start A Business

Apply for a business loan

When it comes to starting a new business, and when it comes to entrepreneur goals, we often tend to forget about women. And, most often, the men become the center of attraction. While discussing entrepreneurship and the start of a new business is being talked about, women are often overlooked. But starting a new business can be an ideally awesome idea and they can accomplish the entrepreneur goals quite well. A world report study says that women can be extremely good managers and they have some sets of amazing leadership skills. There are many women who are housewives but are having enough educational qualifications.

So, for them, starting a new business can be an amazing idea. But for starting a business, she would definitely require some initial funds to invest. In modern days, there are many opportunities for availing business loans. So, a business aspirer can definitely Apply for business loans in order to step towards being her own boss.

Down below are some useful tips for loans for women who want to start a business :

Grants for Female Entrepreneurs: 

Beyond borrowing options like lines of credit and term loans, there are various grant programs as well. These programs are specifically for helping women out there who own businesses. If you can get the approval for one of these grants, it can provide the capital that helps to get your business off the ground or take it to the next level. 

Build relationships in your business community

The small business lenders want to know that the companies they are investing in are suitable for success or not. So, it why it is very important in order to establish yourself within your local business community before you try to apply for a loan. It is necessary for female business owners to build good and healthy relationships in their business communities. A vital part of being a trusted small business is building these relationships, and this can take some time.

Have your financial information organized:

If your finances are in disarray, your application for the business finance will be denied right away. This is very important for you as an entrepreneur that you should verify each information that you give via documentation very carefully. So you must organize your reports and the necessary statements and keep them ready for review will actually demonstrate that you have done your homework properly.

Seek out women-specific lending programs:

In male dominating society, no matter where they apply for a loan, the female entrepreneurs out there face a lot of competition. However, some lenders have implemented some loan programs. These programs are basically for women-owned businesses. Their aim is to make it a little easier for these business owners to receive business funding.

Explore various lender options:

As with any other important and major financial decision, it is always advisable to explore all the options before making a final choice. The business owners should spend time shopping around for the lender that suits their needs in the best way.

Know what you need, and prove you will use it well:

Being able to explain to a lender the exact amount and the purpose of your loan is perhaps the most important factor in getting approval, next to prove financial stability. Vague loan requests generally make the lenders wary. So, be prepared with specific information can only help you in the loan-application process.

It can be a very good idea for a woman to start her new business. So, in order to start her entrepreneurship, she can refer to the above information regarding business loans.

WHAT IS BUSINESS LOAN & CATEGORIES OF BUSINESS LOAN:

business loan

Business loans are a form of unsecured financial assistance provided by many banks and some NBFCs out there in India. The prime aim of the business loan is to support various urgent needs of growing a business. A number of financial institutions offer various term loans and Flexi loans in order to cater to the business needs of any company. Another name of loans for business is called commercial loans. Every type of business like privately held companies, a sole proprietorship, partnership firms, retailers and the self-employed individuals out there can avail these loans.

Moreover, the female entrepreneurs out there can also explore various benefits from these types of loans. A number of public sector banks have some special schemes for the women out there who have their own business. Also, if you want to avail of a business loan from SBI, you can get such special schemes.

Various categories of business loans are discussed down below:

Broadly, there are majorly two types of business loans available in India.

  1. Professional Loans
  2. Trade Loans
Professional Loans:

A professional loan is a type of business or commercial loans. Various self-employed professionals such as chartered accountants, doctors, lawyers, etc. on the basis of their respective individual credit history can avail of these loans. It might also vary from bank to bank as to what amount of loan they can extend to that individual and the latter’s relationship with the particular bank. Professional loans in India u on a personal report basis and in many lands, Government Bonds, National Savings Certificates, Assignment of life insurance policies, Bank’s Term Deposits, etc. especially for the loans that extend over a certain threshold limit of approximately Rs. 15 to 20 Lacs. These loans are basically long term loans and have a payback tenure of about 5 to 7 years.

Trade Loans:

Trade loans are another type of business loan. Types of businesses like partnerships, sole proprietorships, private limited companies, etc. can avail of these types of loans. These types of loans further comprise of three types:

  1. Overdraft
  2. Term loan
  • Working capital loan.

Overdraft: These loans are usually based on a number of collateral or securities especially in terms of Bank Fixed Deposits. Usually, a bank takes approval for a definite overdraft limit. This basically depends upon the cash flows, credit histories, repayment history of the individual promoter or business, tenure of the banking relationship, etc. On the basis of these limits, you can use the amount of overdraft and the bank charges the interest only on the utilized amount.

Working capital loan: these types of loans are generally provided to the businesses as regular working capital. This type of loan is also against the collateral. This has a relatively lesser interest than overdrafts. In this type of loan also, the bank charges the interest on the utilized amount.

Term loans: These are the standard type of loans that can be for both business and personal purposes. The whole amount of term loan is basically disbursed and is EMI based on a definite pre-definite tenure.

ELIGIBILITY CRITERIA FOR BUSINESS FINANCE:

Business finance alludes to cash and credit utilized in the business. It includes acquirement and use of assets with the goal that business firms might have the option to complete their activities viably and proficiently. Some business owners use business loans in order to pay for their salaries and wages until their new organization or company get off the ground. On the other hand, the other companies put the borrowed funds towards the office supplies, business, projects or inventory, etc. The lenders generally want to know the ways businesses intend to use the money. Therefore, the business owners must ensure that they have a clear outline for spending the money in various aspects. 

One can avail of a business loan, with or without security. It actually depends on the bank that offers a loan for business finance. Whether the business loan is for an already existing business or for starting up a brand new one, there are many banks out there that offer loans for business in India. 

You can get the approval and the money within just a few days, if you are having all the necessary documents and if you are meeting the eligibility criteria. 

To avail a business loan, you need:

  • Identity Proof: Whether a Driving License, PAN Card, Passport, Voters ID Card or Aadhaar Card.
  • Address Proof: Ration Card, Telephone Bill, Electricity Bill, Passport, Trade license, Lease agreement or Sales Tax certificate.
  • Income Proof: Bank Statement for the past two years.
  • Financial Documents: Last 2 Years ITR along with the calculation of Balance Sheet, Income & Profit & Loss account for the last 2 years.
  • Proof of Continuation of the business.
  • Business Ownership Proof: Other necessary Documents such as a certified true copy of Memorandum & Articles of Association, Sole Proprietorship Declaration, etc.
  • Last 3 years audited financials.
Eligibility criteria for business finance:
  • For a Private Limited or Limited Company:
  • For loans up to Rs. 15 Lakhs, the total annual income of the business needs to be more than Rs. 1.5 lakhs.
  • For loans exceeding Rs. 15 Lakhs, the gross annual income of the business needs to be more than Rs. 3 Lakhs.
  • For a Self Employed professional
  • If you are a professional, you must possess the required qualifications and skills to avail of the loan for business.
    Doctors, engineers, chartered accountants, and management consultants are required to produce proof of qualification as well.
  • For a Proprietorship firm or a limited liability partnership
  • For a proprietorship firm or a limited liability partnership company, it must have the profit and loss statements in order to meet the minimum criteria of the lender in question. Many banks assess the repayment ability of the borrower before sanctioning the business loan.

 

  • Other Eligibilities for a business loan/ business finance are:

  • You must be between 21 and 65 years of age.
  • If you are a business, then you should show cash profits in the last two financial years.
  • If you are a chartered accountant, then you need to audit the balance sheet of the business.

GET APPROVAL FOR LOAN FOR BUSINESS

Qualifying for a small business loan becomes much easier when you are already prepared for it. Whether you end up applying for a loan for business through a bank or if you are opting for an online business loan for a small business, you should be familiar with every lender’s requirements.

Many banks out there India, offer small business loans to the customers. They allow them to take the loan without any collateral. This means you do not have to lose your business assets in case you default during the time of repayment of the business loan. In such cases, the lender assesses the business on the basis of its expected receivables and the cash flow of the business. Before you apply for a business loan, it is advisable that you must consult the lender regarding your requirements for the collateral, in order to avoid facing any sort of future conundrum.

By knowing if you are meeting the criteria, it will save you time before you apply for a business loan. Also, you need not get frustrated after applying for a loan and getting denied. 

The steps that can help you:

  1. Know the qualification and requirements of the lenders.
  2. Build good credit scores.
  3. Gather the legal and financial documents.
  4. Develop a strong and wise business plan.
  5. Provide collateral.

Are you still worried about how to get approval for a business loan?

Here are some steps to follow in order to get approval for a business loan:

  • Look around for the right business loan

Since many lenders now offer business loans in India, you have to make a comparative analysis between the lenders. Then, choose the one that suits you the best.

  • Know your eligibility for a business loan:

The financial lenders will definitely take into consideration the eligibility criteria of yours. The eligibility criteria depend on the business turnover, experience, ITR certificate, and so on. Make sure that you are eligible for the amount of loan you are applying for. For this, you can use a business loan EMI calculator.

  • Have your documents in place:

Make sure that you have all the necessary documentation when you are applying for the loan. Also, make sure that there are no discrepancies between the documents.

Apart from that, there are certain things you should keep in mind before you apply for a business:

The most important thing is the business loan eligibility. This may vary from lender to lender. But, the generic criteria always remains constant. Some of these are:

  1. Your age must not be less than 21 years. Also, your age should not exceed 65 years.
  2. You must be a citizen of India.
  3. You must have a distinct business plan.

The amount of loan will depend on the eligibility criteria of yours and also partly on your credit scores. If you meet all the eligibility criteria, you are good to go for a business loan.

RATES OF INTEREST AND OFFERS FOR BUSINESS LOANS :

Raising the funds for your business is an ongoing process. Even after the expenditure of setting up a business is met initially, sometimes it requires some additional money for the various smooth operation of the business. But, you might not get the availability of enough funds all the time for your business. In such situation, you can apply for a business loans. 

Loans for business help you to ease out both your requirements and financial worries. The rates of interest of business loans are relatively lower and may start from 14.99% per annum onwards. However, there are some other factors also, on which the rate of interest of the business loans might depend. These factors are:

Profile

Business plan

Loan amount

Credit score

Business stability

Profits

Industry outlook

Risk assessment parameters

Other financial aspects.

The interest rates of business loan 2019 are:

 

The various factors that affect the interest rates of business loans are:
  • Type of Lender

The rate of interest of Business loans may vary from one lender to another. But if you compare the business loan interest rates offered by the NBFCs and the banks, you will find that banks levy lower interest rates, as compared to NBFCs.

  • Existence of Business

The longer the existence of your business, the better it is for you. However, then it is mandatory that the minimum business operation should be at least 2 years, irrespective of the nature of the business. With more years in your business, you have a higher probability of getting loan at lower interest rates.

  • Monthly Turnover

The monthly turnover of a business decides whether your business is making a profit or incurring losses. In a nutshell, it remains a key factor in deciding your eligibility criteria to avail of a business loan. There are times when the turnover of business keeps fluctuating. However, maintaining consistency is highly crucial, as it helps your lender in determining the loan amount and repayment terms.

  • Credit Score

The credit scores basically evaluate the creditworthiness as it is also based on credit history. But, in case, you have availed a loan earlier and repaid it on the due time, or if you pay your credit card bills on due time, you will have a fair credit score. And, if you have a good credit score, it is more likely for you that the loan application to work in your favor. Also, by having a good credit score, you can have more benefits like lower interest rates, and flexible tenure or repayment terms.

  • Collateral

Collateral is security. It is pledged to the lender in order to avail of a loan. The higher the value of collateral, the more will be the benefits. Highly valuable collateral like real estates, machinery, equipment, deposits or home equity provides security to the bank. After examining the collateral, the bank may grant you a fairly higher loan amount since the risk here is low.