Pre-Approved Business Loan

Of all the types of business loans in India, a pre-approved business loan has its own set of benefits and provides many flexibilities to borrowers. It helps to avoid the cumbersome business loan approval process when you need the funds the most and can run the business in a hassle-free manner.

A pre-approved business loan is offered to existing businesses with strong financials and a good CIBIL score by their existing lenders or banks. A business only needs to fill out the loan application and submit the required documents to the lender. The lender provides the loan and this is considerably faster than the usual process.

However, the pre-approved business loan eligibility varies, and not all businesses may be eligible for such offers. The quantum of the amount to be approved as a loan solely depends on the lender’s policies, as well as other factors such as the business financials, revenue stability, profitability, repayment history, and so on.

Benefits of Pre-approved Business Loan

A pre-approved business offers many benefits to borrowers, including:

• Quick Access to Funds: The business can get swift access to funds when required because the loans are already approved and once the request for funds is placed, the amount is quickly disbursed to the bank account. It helps to overcome the funds' shortage and run the business smoothly.
• Attractive Rate of Interest: As a pre-approved business loan facility is offered to businesses with sound finances and a good credit score, the lender generally offers an attractive interest rate on the business loan. For businesses, it means low cost of funds, which helps to keep expenses under check and allows them to focus on the growth of the business.
• Covers all Types of Business Expenses: Pre-approved business loans can be used to meet any type of specific business expenditure. It can be taken for meeting working capital needs, payment of salaries and wages, purchase of equipment, or funding business expansion.
• Minimum Documentation: As the loan is approved based on the creditworthiness of the business and the owner, the approval process requires only minimal documentation. The borrower needs to provide documents related to identity (all KYC documents), address proof, proof of business, last two years of business financial documents, and last six months bank account statement.

Eligibility Criteria for Pre-approved Business Loan

1. The applicant must be at least 22 years at the time of loan application and less than 65 at the time of loan maturity
2. The applicant should have at least 3 years experience in the current business and a total of 5 years of business experience
3. The business enterprise must be making profits for the last two years and a minimum turnover of Rs 10 lakh
4. The business enterprise’s minimum annual income or ITR should be Rs 2 lakh per year
5. Should have a good credit score (at least 750) and rating (if applicable), and provide all relevant documents
6. Should have an excellent repayment history with the lender
7. If the lender is a bank, then factors like performance of the business’ financial assets, current account balance, etc. will also be taken into account. 

Business owners who do not have any pre-approved business loan offers and need a loan to manage their business needs can apply for an unsecured business loan from reputed lenders like SMFG India Credit. The basic eligibility criteria are the same as points 1-5 mentioned above. Please note that business loan eligibility may also depend on various other factors including SMFG India Credit’s policy at the time of loan application. 

Business Loan EMI Calculator

Unsecured business loans can be repaid through Equated Monthly Installment (EMI) every month, for a period of upto 48 months*. Borrowers can choose a tenure based on their monthly budget so that the EMI doesn’t stress their finances.

You can use the business loan EMI calculator to know the EMI amount almost accurately for different loan tenures and help you to choose the most convenient one.

To calculate EMI on the business loan EMI calculator, it needs only three inputs- principal amount, interest rate and loan tenure.

Wrap up

Both pre-approved and unsecured business loans are useful for SMEs and small businessmen, as it helps them to get quick access to funds and take advantage of any market trend without worrying about finances.

Also, one doesn’t need to dip into their savings to meet the business financing requirements.

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