Starting a business is getting more popular as many people dream of turning their ideas into reality. But is it really that easy to start a business? Certainly not, as starting and running a business takes money. You need funds for things like setting up, buying equipment, paying bills and handling everyday costs.
Without enough money, it can be hard to keep your business running smoothly. This is where business loans come in handy. A business loan would help you get the financial support you need to grow, expand or manage your business.
In this blog, we will learn what is a business loan, how it works, the different types of business loans, the many benefits of business loans and more.
What is a Business Loan?
A business loan is money given by banks, lenders or financial institutions to businesses or startups. You get the money to run your business and then repay it with interest over time. Businesses can use this money for many purposes like buying stock, paying salaries, upgrading machinery or expanding operations.
There are two main types of business loans: secured loans and unsecured business loans. On one hand, a secured loan requires you to offer something valuable like property as collateral. On the other hand, an unsecured loan does not need collateral, thereby, making it easier for small businesses and startups to apply.
Whether it is an operating capital loan for daily expenses or a working capital loan for specific projects or a loan to expand the scale of your business, business loans are a big help for businesses to keep things running smoothly.
How do Business Loans Work?
Business loans work simply like other loans-
Step 1: Apply for the Loan: You start by applying for the loan online or at a bank. You will first need to explain why you need the loan and provide some documents.
Step 2: Evaluation by the Lender: The lender will check your credit score, business history and ability to repay the loan.
Step 3: Approval and Disbursement: If your application is approved, the money will be disbursed directly into your bank account.
Step 4: Repayment: You repay the loan in instalments (EMIs) every month. The EMIs you pay include both the loan amount and interest.
If you want this process to be quick and hassle-free, apply for a business loan with CASHe and get the loan amount instantly in your bank account.
Types of Business Loans
There are different types of business loans as they come in many forms, depending on your needs. Here are some common types you must know about:
- Term Loans: These are long-term loans for big projects like buying property or expanding your business.
- Operating Capital Loans: These loans would help you manage the daily expenses of your business like rent, salaries and bills.
- Working Capital Loans: These are short-term loans for specific needs like buying inventory or handling seasonal expenses.
- Equipment Financing: This type of business loan is used for buying or upgrading machinery and equipment.
- Startup Loans: These loans are designed for new businesses that need funds to start operations.
- Merchant Cash Advance Loan: It is a short-term loan that is repaid through a percentage of your daily sales.
Note: Always select the loan type that fits your needs, preferences and budget.
Benefits of Business Loans
Business loans offer numerous benefits. They can not only help you grow but also manage your business better. Here are some significant benefits of business loans:
- You can use the loan money for anything your business needs from expansion to stocking inventory.
- Improves cash flow as it helps you maintain smooth operations without running out of money.
- Unlike investors, lenders do not take a share of your business, so you keep full control.
- Many lenders, like CASHe, offer fast approvals and quick disbursal of funds.
- The interest you pay on a business loan is often tax-deductible, saving you money.
- You can choose repayment terms that match your business cash flow.
Eligibility Criteria for Business Loans
Before you apply for a business loan, it is important to know if you qualify. Here are some common business loan eligibility requirements:
- Your Age: You must be at least 21 years of age to apply for a business loan.
- Minimum Business Age: Your business should be operational for at least 1-2 years.
- Good Credit Score: A credit score above 650 increases your chances of approval.
- Annual Turnover: Lenders often require a minimum yearly revenue to approve your loan.
- Business Plan: Some lenders may ask for a clear plan showing how you would use the loan.
Documents Required for a Business Loan
When you apply for a business loan, you would need to submit some documents. Here’s a list of the documents required for a business loan:
- Identity Proof: PAN card, Aadhaar card or passport of the business owner.
- Address Proof: Proof of your business and residential address.
- Bank Statements: Recent bank account statements for 6-12 months.
- Business Financials: Profit & loss statements, balance sheets and tax returns.
- Business Registration Proof: Documents showing that your business is legally registered.
- Loan Purpose Document: Explain how you plan to use the loan amount.
How to Apply for Business Loans with CASHe
Here’s how you can apply for a business loan through CASHe:
- Download the CASHe App.
- Sign up using your phone number and email ID and create an account.
- Select the loan type you wish to apply for.
- Use the app to upload the required documents.
- Submit the documents and wait for approval.
- Once approved, the loan amount will be transferred directly to your bank account.
Conclusion
Business loans are really helpful for entrepreneurs to get the money they need to start or grow their businesses. Whether it is an operating capital loan to cover everyday costs or an unsecured business loan for bigger investments, there are many types to choose from. If you need quick and easy money for your business, CASHe is a great option. You can apply for a business loan through the CASHe app and get an instant loan with fast approval.
Download the app today!
