Your complete guide to getting small business loan easily

As a small business owner, you are always busy with managing different aspects of your business including sales, purchase, transportation, payments, marketing, and many others. Due to lack of personnel, you have to multi-task and handle multiple aspects of your business together. As a result, you do not have enough spare time to focus on your cash cycle and financial position. Sometimes, it may happen that you have a great opportunity knocking on your door that requires you making a significant investment, but your financial situation is holding you back and does not allow you to go after that opportunity freely. In such a case, you must opt for a small business loan to supplement your financial position.


Small Business Loans

The small business loan is a term used to represent the different types of easy business loans offered by financial institutions to small business owners. Depending on the nature of the requirement, these loans could be secured as well as unsecured. These loans are meant for usage in your business only and should be used for the specified purpose only. The rate of interest against small business loan varies from 10% to 19% and can be repaid in up to 84 instalments.


Different types of small business loans

Following are the different types of small business loans that are available from financial institutions in India, Banks and NBFC’s, along with easy loans without document providers.


-          Unsecured Business Loans

-          Line of Credit

-          Machinery Loan

-          Working Capital Limits

-          Term Loans

-          Bank Overdraft

-          Invoice Factoring

-          Business Credit Cards

-          Letter of Credit

-          Working Capital Loans


How to get small business loan easily?

There are many different types of small business loans that you can avail from a lender of your choice for your business-related requirements. If you are wondering how you can get a small business loan quickly, then read the tips mentioned below: -


-          Check your credit score

Whenever you submit an application, the lender will check your credit score before proceeding ahead. Your credit score is calculated on a number of parameters and represents your creditworthiness to the lenders. A credit score of 750+ is considered ideal by the lenders and ensures speedy approval of your application. So, before you apply for a loan, you must check your credit score personally. If it is below the desired level, it is advisable to wait for some time and work towards repairing your credit score and then applying later on.


-          Prepare a business plan

You must prepare a comprehensive business plan to impress the lender about your seriousness. Your business plan should include all details regarding the proposed use of the loan amount. Take professional help to prepare this business plan and make sure that no information is left wanting. You should prepare the CMA data also to accompany the loan proposal to convince the lender about your seriousness.


-          Get a Collateral/Guarantor

Having collateral significantly increases the probability of your loan application to be approved, as the lender has an option to auction the collateral if you default on payment. In case you do not have a collateral, it is advisable to get a financially sound person as your guarantor on-board. This would also help to convince the lender regarding the safety of your money.


-          Prepare your financial documents

Your financial documents are necessary to support your loan application as they help the lender establish your eligibility as well as repayment capacity. You must keep all your financial documents up to date and ready. Make sure that you have paid all your taxes, and no government dues are outstanding. Some of the financial documents that you should have ready are: -

  • Income Tax Returns for 3 years
  • Audited Financials with Form 3CB/CD
  • Bank Statements for last 1 year
  • Running Loan Schedules/Repayment history
  • KYC Documents
  • GST/VAT/CST Returns
  • License from statutory authorities
  • MSME/SSI Registration

This is just an indicative list of documents that will be required. For a complete list, you should enquire from the financial institution.


-          Research around

You must do thorough research before finalising a particular type of business loan. There are different types of small business loans that are available, and each loan type is suitable for a particular usage. So, you must identify the most suitable loan type that matches with your business profile and then proceed ahead with your application. If you do not have all of the required documents or have a lower credit score, there is no need to be disheartened; there are many easy loans without document providers with whom you can apply for a business loan.


Getting a small business loan could be the answer to all your temporary financial woes. But make sure that you have selected the most suitable type of loan that satisfies all your business requirements and only then proceed ahead with finalising the application.

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