31 July 2023
Sir, A business person business loan rs:20 lacs required from bank .banker it returns two years 21-22 and 22-23 profit and loss account and balance sheet documents required. Question: Assessess sales turnover declared f.y.21-22 and 22-23 years in it returns
31 July 2023
These criteria are most commonly evaluated while processing a business loan:
Credit score: It is important for the banks to be assured about the repayment capability of the borrower. A high credit score assures that to the bank. The bank will check the company’s credit score to determine credibility. They look into the repayment history on other loans and liabilities you have. A good credit history will help in getting the loan easily with better terms and interest rates.
Business stability: The financial stability of the business is important to sanction the loan. Banks will look into the sales and profit aspects of the business. This can be inferred from your business history and the tenure of your company. Usually, banks prefer companies which have a tenure of atleast 3 years to sanction the loan. Older the business, greater the chance of getting a business loan with favourable interest rate and other conditions.
Business Profitability & Continuity: Another important criteria is that your business should be making considerable profit. Banks wouldn’t want to lend money to a business that is not doing very well. Bank might ask you for the profit & loss statement of the past 2 years. Your organization’s profitability and revenue play an important role in determining if a company can be given a loan or not.
Current relationship with the Bank: Your current standing with the bank is also important. The bank will look into all your relationships with the bank. The cash flow and payments on your account. It will also see your repayment history on any existing loans you have with the bank.
Collateral: Though many government schemes give collateral free business loans, the borrower can pledge some kind of collateral, that he is comfortable with, to get better loan terms and interest rates. The government guidelines state that collateral is not mandatory, the applicant is free to provide some. Pledging a collateral acts as additional security on the loan, allowing for higher loan amounts and lesser interest rates.
Roughly speaking it can be around Rs. 1 Cr, with profit margin of not less than 15%.
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