What Is A Sole Proprietorship Business Loan?
Traditional means such as banks are often avoided by sole proprietors because of the long documentation and waiting period. Sometimes they might not even qualify to apply for a loan, due to lack of collateral and poor or no credit history. To help such proprietors who handle small or medium businesses, there are online lending companies such as FlexiLoans and NBFCs that now extend loans to sole proprietors.
What is a sole proprietor Business loan?
These are short-term loans designed for individual entrepreneurs who handle small scale businesses. Such a loan could be in the form of an unsecured working capital loan, a merchant cash advance, a line of credit or a short term business loan. With funding from these loans these entrepreneurs can grow and expand their company.
What are the features of a sole-proprietorship Business loan?
These are the general features of a sole-proprietorship loan.
- Such loans are usually collateral free
- Provides funding up to Rs.50 lakhs
- Customizable loan tenure and repayment schedule
- Online application
- Finance available to a wide range of sectors
What documents would you require to apply for a sole proprietorship Business loan?
The basic documents that one would need to apply for a loan are –
- Registration documents – these include GSTN, Shop and Establishments license, IT Registration – PAN, TAN, Returns.
- Updated bank generated account statements. Note that your primary bank account should be the one that is used for most of your business transactions. Even better if it’s a current account.
- Statutory filings should be made and tax-related paperwork should be up-to-date.
- In case you work out of a rented office, keep the rent agreement handy for proof of address. Or you could even show your utility bills.
Points to keep in mind before applying for a sole-proprietorship loan
- Know exactly why you need a loan and how you will use it
- Be wise and choose an appropriate lender.
- Try opting for online lenders since the process is hassle-free, smooth and fast.
- Make a strong case for your business by sharing your vision and mission while applying.
If you meet the eligibility criteria and have all the required documents you can easily avail a sole proprietorship business loan. So be confident and apply now!