What is a Pre-approved Business Loan?
Aug 27, 2021
What is a Pre-approved Business Loan?
Getting a business loan can be hectic as it involves a cumbersome procedure to have the loan approved. Conversely, getting a pre-approved business loan helps in saving significant time and energy to kick-start the business in a hassle-free manner.
Eligible borrowers with a good CIBIL score and a sound financial background can avail of pre-approved business loans. The interest rate for business loan in India also varies for such borrowers. All they need to do is to submit the business loan application to the lender. The lender will further review the credit history along with other factors required to make an offer.
It is a perk served by financial institutions to borrowers who keep their credit and financial records healthy and do not commit any violations. In such a case, lenders might pitch the eligible borrowers with a calculated pre-decided and pre-approved loan amount. FlexiLoans’ interest rates are designed for every type of business, providing SME business loans interest rates as per the calculation and analysis of the borrowers’ finances.
How Will Borrowers Benefit from Pre-approved Business Loans?
Taking a pre-approved business loan helps the borrowers in many ways.
The borrower knows how much money is going to be required and how it will be utilised. Since interest is paid, the borrower makes the most of the loan amount and channels it to get the most fruitful results rather than improperly using it. Due to the efficient utilisation of funds, the wastage of funds in the business is minimised.
Getting pre-approved loans also helps the borrowers knock down the investors’ doors and retain control over the business. The borrower can analyse the cost; since the pre-approved loans are given at attractive business loan interest rates and terms, the incurred costs are not unreasonable.
Why Prioritise Pre-approved Business Loans?
The merits of pre-approved business loans are as follows.
Excellent Interest Rates
Interest rates vary on the credit rating of the borrowers. In other words, the lender has all the right to modify the business loan interest rates from borrower to borrower, depending upon their financial history.
It goes unsaid that if you’re offered a pre-approved loan, your credit rating and financial background are sound.
Further, since you are a dedicated, dependable customer of the lending institution, you will have access to a tempting business loan interest rate with flexible repayment tenure.
Hassle-free and Requires Only Minimal Documentation
With Flexiloans and other lending institutions, borrowers can avail of business loans with minimum formalities and documentations. FlexiLoan interest rates are competitive, modified, and customer-driven.
Helps You to Keep Your Saving Untouched
Why would one put their savings into their business when they can get excellent pre-approved business loans from financial institutes? At Flexiloans, we assure the best options of business loans along with the most competitive corporate loan interest rate and small business loan interest rate.
Support to Cover the Operational Costs
At times, to expand the business or keep it running smoothly, you may need business loans to overcome a shortage of funds.
NBFCs and banks provide an MSME loan interest rate depending on the customer’s financial history. The money can be used to cover operational costs effectively.
Prompt Loan Disbursal
With pre-approval loan offers comes the ease of getting funds quickly. As the name says, since the loan is already approved, it takes very little time to get disbursed.
Reasonable Terms to Access Loan
If you have good credit ratings and financial history, fewer conditions are imposed for granting loans. Hence, with pre-approval loans, access to funds becomes easy.
Eligibility Criteria to get Pre-approved Business Loans
Eligibility criteria involve the conditions that help the borrower to check whether they qualify for pre-approved loans. It is important to check the eligibility criteria of the business owners and other various entities including self-employed professionals who can access pre-approved business loans hassle-free.
A look into business loan eligibility criteria will help the borrower check whether they can get this loan.
The eligibility criteria are as follows.
- Applicants should be within the age range of 21 to 65 years.
- The loan will be granted against businesses running for at least three years.
- Income tax returns should have been filed for a minimum of one year for the loan applicant’s business.
- Other documents required for the loan include identity proof, address proof, financial documents such as bank statements and income tax returns, and proof of business ownership.
Before we go further, some clarification is required to clear the confusion regarding two terms, pre-approval and pre-qualifications.
Difference Between Pre-approval and Pre-qualification for Business Loans
Pre-qualification for Business Loans
Here, no documents are required by the lender. Pre-qualification means that the borrower meets the qualification criteria and can apply for a specific loan. The entire process consists of verbal communication regarding the loan amount, interest rate, and duration of repaying it.
Pre-approval for Business Loans
The evaluation process of financial documents and credit scores is started in this stage; hence, the necessary documents of borrowers must be submitted.
At FlexiLoans the borrowers are provided with exclusive business loan interest rates with minimal documentation. The small business loan interest rates are competitive and reasonable.
All Credit Scores are Considered in Business Loans
NBFCs offer simple business loan options with quick disbursement and unbeatable features and benefits, including flexible processes and tempting interest rates.
To evaluate the credit score of the borrower, NBFCs consider all the credit scores, whether excellent or poor. For example, at FlexiLoans, as long as you have at least six months under your belt, you are eligible for a pre-approved loan.
How to Apply
If the process of evaluating for the appropriate loan amount with the suitable interest rate is done and a pre-approved business loan of your choice appears to be a good fit, you are only a step away from getting the funds disbursed.
The basic steps of the application process are as follows.
- The borrower is required to fill out a business loan application form.
- They must then insert all the relevant personal and business-related details that are asked in the form.
- The applicant further submits the application form.
- The application will be scrutinised by the lender.
- Based on the details mentioned, the borrower will be further informed about the business loan offer. Generally, this process takes two or three working days.
- After meeting the eligibility criteria and completing the process, the borrower will get notified by the lender about any additional details and documentation required.
Current Business Loan Interest Rates in India
Different financial institutions mean there are variations in the interest rates. Business loan rates in India start from a minimum of 15% per annum and go maximum up to 22% per annum.
The repayment tenure and the amount of loan vary from lender to lender.
Business loans interest rates in India fluctuate as per the guidance released by the Reserve Bank of India (RBI). With FlexiLoans, small businesses and entrepreneurs can easily access business loans, as our interest rates are comparatively more flexible.
Business Loan EMI Calculator
Business loans can be paid back by the borrowers through various modes. One of the most popular ways is through equated monthly instalments (EMI).
As a vigilant and rational borrower, it is always good to know the amount of EMI you must pay against the desired amount of loan. The calculation of the monthly instalments can be done by simply filling the loan amount in the business loan EMI calculator.
Here is a simple guide to help you with the keywords required to be followed in the business loan EMI calculator.
- P stands for Principal and refers to the loan amount.
- N stands for the Tenor and refers to the duration of the loan required to repay to the lender.
- r stands for the rate of interest applicable on the loan.
Note: The calculation in the business loan EMI calculator is done by using the following formula.
E = [P x R x (1+R) ^ N] / [ (1+R) ^ (N-1)]
A pre-approved business loan is a boon to all the venture holders and small businessmen; it allows them to access funds quickly and with less hassle.
The eligible borrowers who get the proposal to opt for pre-approved, instant business loans due to their stable history of finance should make the most of the opportunity. It is suggested to not touch savings and reserves and avail of business loans.