How To Successfully Secure An Emergency Business Loan

Running a business requires access to capital. This capital can be sourced as an equity from owners or new investors or as debt in the form of a business loan.

Many a time, a company would need immediate cash to make certain payments to a vendor for getting raw material or even for meeting day-to-day requirements as the cash flows get delayed due to pending receipts. This is more the case with small businesses because they typically do not have large surplus in the bank.

Secured And Unsecured Loans

Business loans can be categorised under two heads based on whether the borrower needs to place an asset of value as a collateral or security. Secured loans require some more time to process, as these involve a valuer assessing the property, be it ascertaining the ownership or the actual current value.

In contrast, unsecured loans do not require any collateral, are of smaller size and for a shorter duration and can be availed much faster.

Lenders look at the business owner’s income profile, revenue of the business, cash flow and outstanding debts, if any, to sanction an unsecured loan.

Getting A Business Loan Quickly

Although secured business loans are also easy to get, if a business needs to access emergency credit, they should seek unsecured loans, provided the quantum of the loan meets the requirement.

Unsecured loans allow business owners to borrow as much as Rs 50 lakh within one to two days without having to step out of their house or office if they meet the basic eligibility criteria and have their papers in order.

Steps To Get An Emergency Business Loan

• Eligibility:

Most lenders give business loans to enterprises who have been operational for at least two years. Some lenders insist on other factors like the business being profitable and a minimum revenue.

• Apply:

The first step involves applying online and filling all the basic details. Although one can also do it the conventional way by visiting a branch, these days many lenders have provided the convenience of applying online and saving time. One would need to fill details about the business, amount needed and so on.

• Documents:

The next step involves preparing and submitting basic documents. These would cover basic know-your-customer documents such as identity and address proof besides bank statement of the business and, if the amount is above a threshold, even the GST certificate.

• Sanction:

If the documents are in order, the lender offers terms of the loan including the tenor and interest rate to be charged. If the borrower agrees to the terms, the loan is sanctioned and usually disbursed within 24-48 hours.

Conclusion

Getting a business loan to meet emergency needs can be a swift and hassle-free process, if the borrower has a clean repayment record over any personal or business-related loans in the past.

As long as the basic criteria are matched and the paperwork is in order, entrepreneurs can get access to a business loan within a couple of days through a fully online process.