What Are The Benefits Of Getting A GST Business Loan?
The Goods and Service Tax (GST) was implemented by the government for the smooth functioning of the businesses. GST loan is one of the easy process of getting a business loan. Read to know more in detail.
The Indian government implemented the Goods and Services Tax (GST) from July 2017. The new system subsumed many state and central indirect taxes, and requires all business entities to deposit GST and file GST returns periodically.
A GST business loan, or a GST loan, is an unsecured business loan in which a lender determines the creditworthiness of a business based on the GST returns filed by a business.
Typically, to get a GST business loan a business owner does not need to furnish any additional documents as the lender can get all the information they need from the GST returns filed. This makes the application process quick, easy and hassle-free.
How Does A GST Business Loan Work?
The only aspect that is different to a GST business loan as against a normal business loan is that in this case, the basis of approving the application are the GST returns filed by the enterprise.
Apart from this, a GST business loan pretty much functions like a normal business loan.
While in the case of a non-GST business loan, the lender typically examines the audited financial statements of a business, in a GST business loan, the GST return filed is the basic document that is taken into account.
Much like a normal business loan, a GST business loan also needs to be repaid in full, along with interest, within the time period specified.
Highlights And Benefits Of A GST Business Loan
Disbursed Quickly:
Since all that a lender needs to see is the borrower’s GST returns, the paperwork involved is minimal, and so a GST business loan can be approved and disbursed very fast.Collateral-Free:
A GST business loan is collateral-free, meaning a business does not have to pledge any asset to borrow money. This can be a very good option for a small business, which may not have much by way of collateral to furnish, given its size and cash flow position.Loan For Any Purpose:
A GST business loan can be used for any business purpose, and the lender will not ask a business owner to specify why they want the loan. All they need to see are the GST returns, which should have been filed in time and satisfactorily.Minimal Documentation:
Apart from the duly filled out application form and the PAN number of the business, all that is required are the latest GST return invoice, the company incorporation certificate and an address proof, which could be the Aadhaar number of the owner or voter ID or driver’s license.Conclusion
A GST business loan can be used for myriad purposes like for meeting working capital requirements, paying wages, buying raw materials or equipment or for any other purpose related to the business.
Even if you do not have all the financial documents related to your business readily available, as long as you have filed your GST return in time, you can avail the loan.
Many small businesses find it difficult to avail a business loan, and a GST business loan can fill that need gap.
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