After stepping into the Digital World, things are changing very rapidly and enabled the expansion of the business sector. Now, more and more new entrepreneurs are emerging and utilizing their skills to boost the business. But skill is not the only factor which can take the business at the sky-high level; the missing factor is the capital. An uninterrupted flow of
capital is required to maintain the smooth operation of the business. Without money, no business can grow and the need of the same can be fulfilled via a loan.
The loans are also categorized into two forms, i.e. Long-term loan, and short-term loan. In the long-term loan, the repayment tenure is higher and the interest rate is lower. But, in short-term, the repayment tenure is shorter and the interest rate is higher. Even though the short-term loan is high in demand and you may wonder why? Well, the comprehensive solution to your question is listed below.
Short-term business loan
A short-term business loan is a financial loan tool which enables you to meet your short-term business demand in an effective manner. Business means ups and downs and the owner must get ready to face the same to fulfill the demands of the business such as inventory, staff salary, capital cost and much more. So, in this case, you will choose the short-term loan to meet your business requirements.
The repayment tenure of the business loan is 12 months, means within this frame of time you can finish your all dues. However, if you have already taken the long-term loan from the lender and failed to clear the debt, then you can use the short-term loan to overcome such a problem. In short-term loan, you don’t have to go for the collateral but some lenders may ask for the same just in case of bad credit score.
What are the features of the short-term loan?
A short-term loan requires fewer documents and due to the same, the loan process becomes easier and smoother. Once, the loan is approved by the lender, then the loan amount will be disbursed in the borrower’s account in a quick span of time. Hence, this speedy process enables the borrower to utilize the money in business on time.
In short-term loan, you don’t have to worry more for the repayment and you can do the same as per your convenience. This feature enables you to pay only the interest amount monthly and the principal amount you can pay at the end of the loan tenure.
In short-term loan, you can avail the business loan up to Rs 50 lakh and use the same amount to boost your business.
The entire process is online and this will help you to manage your business loan in an efficient manner and will reduce the race part in the bank. Through this feature, you can track your application status and also can calculate your monthly EMI against the loan amount.
Open for all
A short-term business loan is open for all, means anyone who needs to start up the business or want to expand the business can move to the lender to avail the business loan. There is no bar fixed by the lender and enable all the people to access this loan service.
After knowing about the features of the short-term business loan, it’s time to look for the documents required for the loan process and for your solace, the list of documents is listed below which will help you to apply for the loan in an easy manner.
What are the documents required for a short-term business loan?
- Duly filled application form
- Passport size photo
- A copy of Bank account statement of last 6 months
- Identity proof such as Voter ID Card, Aadhar Card, Passport and Driving License
- Residential proof such as Electricity Bill, Water Bill, Telephone Bill, Ration Card, and Rent agreement paper
- If you own a company, then you will have to provide the Certificate of Incorporation to avail the business loan.
- MOA and AOA of the company are required for the business loan. MOA means Memorandum of Association and AOA means Articles of Association.
- The age of the borrower must lie in the range of 22-55 years.
- Your business age should be a minimum of 3 years.
- A copy of the turnover of your business
When Do You Need Short-Term Business Loan?What is the interest rate charged on the short-term business loan?
The starting rate of short-term business loan is 18% and will move higher as per the loan amount and the repayment tenure. Apart from the interest rate, the bank will charge the processing fee and it will be 2% of the loan amount. The bank also kept the EMI bounce charge and it is Rs 2500 for every bounce, means if you failed one-month EMI then you will have to pay the bounce charge.
Now you are well versed with all the aspects of the short-term business loan. So, it’s time for the application process. The process is simple and can be performed quickly but for your convenience, the detailed application process is listed below.
How to apply for a short-term business loan?
- First and foremost, select the lender and for the same, you will have to go for the research work to find out who is offering the loan at a low interest rate and whose processing fee is low as this will help you to repay less against the business loan.
- If you are looking for the online method, then visit the official website of the bank you have chosen for the SBI Business loan and then click on ‘Apply’.
- Now fill the application form with all the details such as Name, Business age, Loan amount and much more.
- Thereafter, you will have to enclose all the relevant documents prescribed by the bank.
- After uploading the documents, click on the ‘Submit’ button.
- That’s it; your job is done and now the bank will look after your application form and the documents and if found satisfactorily then your loan will be approved.
- Once the loan is approved your loan amount will be disbursed in your bank account in a short span of time.