Lenders Guide and Procedure on Business Loan In Mumbai

Lenders Guide on Business Loan in Mumbai_ Eligibility & Application Procedure

Mumbai is the largest city and home to almost every major industry in India. The state of Maharashtra accounts for nearly 13% of India’s industrial output. Mumbai itself has a GDP of $430 Billion, the highest in the nation.

The city is abuzz with businesses of all sizes and types in almost every nook and cranny of it. This characteristic of Mumbai establishes it as both a profitable and cutthroat market for entrepreneurs.

The dominant competitiveness in the Mumbai market makes it a necessity for businesses to possess state-of-the-art industrial equipment and infrastructure, be it the latest technologies, machinery, plants, etc.

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These expenses require substantial financial resources and a business loan in Mumbai is ideal to meet such hefty spending. Business loans assure that enterprises do not face capital erosion and provide for a convenient funding measure.

Entrepreneurs can avail credit of up to Rs. 30 Lakh for infrastructural development as either short-term, intermediate-term, or long-term loan in Mumbai.

Guide on eligibility criteria for a business loan

Loan of any kind is subject to certain eligibility criteria, meeting which the credit is advanced by the respective lender.

Eligibility criteria for a business loan in Mumbai are

  1. Age: The business loan applicant should be within the age range of 25 – 55 years.
  2. Business vintage year: It refers to the year in which a certain business acquired its first capital investment. Financial institutions and NBFCs ask for a minimum of 3 years of business vintage for advancing the business loan.
  3. Credit score: Credit score substantiates an individual’s creditworthiness to the lender. Entrepreneurs applying for a business loan should have a minimum credit score of 750.
  4. Income Tax return filing: Business loan eligibility criteria dictates that the enterprise for which the loan is availed shows Income Tax return filing for at least the previous 1 year.

These are the standard eligibility criteria governing business loans. However, the lending institutions might impose further eligibility criteria depending on several factors such as business type, industry kind, capital employed, etc.

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Financial institutions consider the following applicants for a business loan in Mumbai

  1. Business entities: Partnership firms, Private Limited companies, Limited Liability Partnership enterprises and closely held limited companies are considered for business loans. In some cases, other forms of business are also taken into account.
  2. Self-employed non-professionals: Manufacturers, service providers, retailers, suppliers, traders, proprietors, etc. are some of the self-employed individuals who are eligible to apply for a business loan.
  3. Professionals: Professionals with their firms or institutions such as Chartered Accountants, doctors, architects, etc.

Documents required for Business Loan in Mumbai

The following are the business loan documents which you need to produce during the loan approval procedure –

  1. KYC documents such as Ration Card, Voter’s ID card, PAN Card, Aadhaar Card, and Driving License of the applicant.
  2. Passport-sized photograph.
  3. Business Vintage documents.
  4. Financial documents of the business.
  5. Statements of the business’ bank account of the last few months, varying across different lending institutions.

Upon meeting these minimal documentation requirements, you can avail a business loan in Mumbai.

Things to consider when availing a business loan in Mumbai

Given Mumbai’s thick population of businesses, availing a loan offers a significant financial advantage over your competitors.

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However, it also depends on how to use your business loan for financial growth. The factors which you need to consider when availing a business loan are –

  1. Repayment tenor: Selecting a tenor which would complement your business’ growth and revenue model, as well as working capital cycles, would put in an advantageous position when repaying the loan. It would ensure your business is not financially burdened by the loan repayment.
  2. Loan corpus: Carefully assess your expeLenders Guide and Procedure on Business Loan In Mumbainses and requirements to ensure you loan the adequate amount.
  3. Credit score: Interest rates, as well as approval, heavily rely on your credit score. With a higher credit score, your loan attracts a lower interest rate and also increases chances of loan approval. Therefore, check with your executive before applying to ascertain if your credit score aligns with your business’ affordability.

Business loans are a convenient mode of acquiring finance for your business as it offers capital efficiency and also works as emergency funds.

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