We offer end to end financial services to our clients such as Personal Loan,Home Loan,Business Loan,Loan Against Property,Auto Loan,Machinary loan,Education Loan,Gold loan,Insurance,Investments and Credit Cards.
Eligibility criteria for business loans can vary significantly depending on the lender and the type of loan. However, here are some common factors that lenders typically consider when evaluating applications for business loans.
Credit Score
Personal Credit Score: Many lenders will look at the personal credit score of the business owner, especially for small businesses. A good credit score (generally 680 and above) can improve your chances of loan approval.
Business Credit Score: Established businesses may also have a separate business credit score. Lenders will consider this score as well.
Business History
Time in Business: Most lenders prefer businesses that have been operating for at least 1-2 years. Startups may face more stringent requirements or need to seek out specialized startup loans.
Revenue: Demonstrating consistent revenue can be crucial. Lenders typically look for annual revenue figures to gauge the business’s financial health and ability to repay the loan.
Financial Statements
Income Statements and Balance Sheets: Lenders will review these to understand the business’s profitability, expenses, and overall financial condition.
Cash Flow: Positive cash flow is essential as it indicates the business can manage its debts and expenses. Lenders may require cash flow statements.
Business Plan
A well-structured business plan can be important, especially for new businesses. This should outline the business model, target market, revenue projections, and how the loan will be used.
Collateral
Secured Loans: Some loans may require collateral (assets such as real estate, inventory, or equipment) to secure the loan.
Unsecured Loans: These do not require collateral but often come with higher interest rates and stricter eligibility requirements.
Debt-to-Income Ratio
This ratio helps lenders assess the business’s ability to manage additional debt. A lower ratio suggests better financial health and an ability to handle new loan payments.
Purpose of the Loan
Lenders will want to know how the loan proceeds will be used. Common purposes include working capital, equipment purchases, expansion, or refinancing existing debt.
Legal and Documentation Requirements
Business Licenses and Permits: Proof of legal operation.
Tax Returns: Both business and personal tax returns for the past few years may be required.
Articles of Incorporation or Partnership Agreements: Documentation that establishes the legal structure of the business.
Personal Guarantee
Jothi Finserv require a personal guarantee from the business owner, especially for smaller businesses or startups. This means the owner is personally responsible for repaying the loan if the business cannot.
