The state of Karnataka has a Gross State Domestic Product (GSDP) of around Rs. 2.3 Lakh Crore and is growing at a steady rate of 8% every fiscal year. It has a literacy rate of 75.4%, which is a notch above the national average of 73.04%. This percentage of educated individuals is at an all-time high in Karnataka. Therefore, degree of competition to avail a business loan in Karnataka approved is high and only the best persist.
Loans are financial grants based on your financial ability to repay as the borrower. There are many people out there looking for funds to kick-start their business career. But only a few of the loan applicants get converted into beneficiaries.
The chances of a loan approval depends on multiple factors which will be gauged by the representative from the lender. Therefore you must prepare yourself for the various things that you will be asked for when you apply for a business loan in Karnataka.
5 things you will be asked while applying for a business loan:
- Business plan- Loan officers will first ask the business idea for which the credit has been applied for. New ideas are mandatory for start-ups. In the case of an existing business, make sure the course of action is clearly defined. You should have a clear idea about service businesses that are booming before formulating a business plan. The purpose/end-use of the loan must be clearly and explicitly stated as a part of your plan. You must clearly understand business finance meaning to be able to formulate and represent the business plan. It includes scalability, short-term & long-term targets as well as other aspects of your plan.
- Revenue model- The next thing that you will be required to present is a sustainable revenue model for your business. The strategies that you plan to adopt while marketing your product/service and generate sales. Revenue model helps you price your product after identification of your target customers. Your target customers are your primary source of revenue. Set the prices for your products or services after considering what you offer and substitutes available in the market.
- Financial details- The financial institutions always ask for financial details in case of already existing businesses. They will ask for chartered accountant audited final account statements (trading, profit and loss accounts and balance sheets), income tax return certificates of the preceding 5 financial years before approving a business loan in Karnataka.
- Personal account statements- The officials will ask for your personal account details to check your finances and tally them with the sources of income that you show, in order to verify your genuineness. It is best to keep your personal finances in order before applying for a business loan in Karnataka.
- Business and personal details – The lenders ask for proof of business before sanctioning your loan. This query requires copies of telephone bills, electricity bills. Last but certainly not the least, they ask for PAN, Aadhaar and passport sized photographs of the beneficiary before sanctioning the loan, to keep a record of the personal details.
You should have a clear idea about business finance meaning before trying to secure a loan. It is the owner of the business that they will primarily evaluate.