How are Business Loan Approved By Banks
January 18, 2021 | Business | No Comments
Many commercial banks loan money to many companies, individuals and businesses almost every day. Most commercial banks successfully operate because of business lending and loans. Loaning monies to businesses allows them to earn profit. Through this they are building their brand and contribute to the success of the economy.
What Do I Need to Apply For a Business Loan?
The objective of loans to businesses are the following: The loan will provide financial assistance to proprietors of businesses or enterprises with limited capitalization. It also is a compliance to different ordinances and laws implemented in a region. A business with the proper permit to operate are qualified for this types of loan. Do you want to watch a video on how to apply for bank loans? You can check out this videos in YouTube. Be sure to download an Ad Blocking App for a better viewing experience. https://youtubevanced.com
Businesses like agri-business and services whether it is a single proprietorship, cooperative, partnership or corporation can avail of this financial assistance offered by commercial banks. There are some criteria that banks follow when giving out a financial loan:
- Businesses should have tangible assets as collateral.
- Businesses should be duly registered with the appropriate agencies provided by the law.
- These businesses should be engaged in a business activity within the major sectors of the economy.
- Here are the common requirements needed by banks when applying for a business loan:
- Credit application with picture
- Co-maker’s credit application
- Registration papers, Business and other permits
- Documents representing ownership to the property or a contract of lease with the owner of the property or building
- Income tax returns for at least the past two years
- Documents of Acceptable collateral.
- Post dated checks
Some banks when granting business loans will follow substantial policies like the following:
- All accommodations for this type of loan is subject to existing credit policies.
- This loans are only allowed to qualified business proprietors with proven credit worthiness in accordance with the existing credit policies.
- The business should have been existing for at least 5 years.
- An Interest rate shall apply with this kinds of loans.
- Depending on the bank, there is a maximum and minimum loanable amount.
- The bank will set the mode of payment/schemes of payment.
- Deductions may apply.
- The applicant is required to submit documents relating to the acceptable collateral offered.
- The credit records shall be established for clients and evaluated like other credit records.