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How To Secure A Business Loan?
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When you are starting a business you will need a capital to begin the initial process for a startup. The only way one can get a capital is through the process of business loan. You can always approach a bank or a financial institute for a business loan, but there are certain things to be kept in mind before you start the application process.
Business loan process:
Enabled with IT, there are some banks that can revert back with your business loan eligibility very quickly. It will allow you take a decision about the benefit of the business loan verses the alternative loans available in the loan market today. However, you will need to keep it in mind that as the unsecured loans for business, you may skip the part of the process where you need a guarantor, collateral or security, but you will have to take a higher rate of interest into account.
Here is a brief insight into the steps of the business loan.
• Estimate the principal amount.
• Apply for the business loan with right documentation, which will vary from bank to bank. Each financial organization has different emphasis on documentation.
• If you receive an offer letter from the bank, then you will need to ensure that the business loan is customised to meet your needs as well as EMI are fine-tuned too as you should have a business strategy in place to repay the loan EMI consistently.
• If the discussions with your bank officer fall in the place, you should check out the terms and conditions of the business loan and then sign out the agreement.
• However, if the details of the business loan are not agreeable with your business, you will have to decline and take a reality check.
The ground reality check:
In spite of the big boost budget 2014 offered to the entrepreneurs, the systems at the ground level are still the same. The vision of our new government is yet to percolate down to the level of banks and financial institutions who offer funds to businesses. Since, it may take a while to have more receptive market;consider some of the other alternatives to business loans.
Overdraft – the most common alternative to business loan
This is a secured loan against the assets. Though, most common people do not want to take a loan against the gold, stock options, land, real estate property or any other asset available, most successful businessmen have. As history bears witness to the grand success of corporate giants, most of them started by taking the loan against the assets. These overdraft facilities will offer you an opportunity to use these assets and the funds too. The loan to value ratio of the most overdraft loans is 80 to85% of the market value of the asset.
Author Bio :- Neha Sharma is a finance student who loves to write about business loans. She is delighted to share information about the facets of business loans and offer value to entrepreneurs as they use these banking products to take their businesses to higher level of success.
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