Blogs - FEB 1 2023

How to grow your business with NBFC Business Loans

Business Loans offered by NBFCs empower your business and take it to new heights. Lulu Finserv offers business loans for the MSME sector and have designed our offering to match your unique needs. We offer business owners and entrepreneurs, small business loans to ensure funding is never an obstacle when striving towards success. We have optimised every step of the way to promise a hassle-free and time-efficient experience. Business Loans are instalment loans for the purchase / Renovation / Stock Addition / Asset Purchase for the purpose of upgradation of business to the next level. A Business loan can be availed by Individuals, Sole Proprietors, Partnership Firms, Private and Public Limited Companies, Limited Liability Partnerships, Trusts, and Societies and who satisfy the credit parameters prescribed by Lulu Finserv. MSME loans are instalment loans given for manufacturing activities and service Enterprises in the MSME segment as per the MSME definition in the MSMED Act.

Definition of MSME

a) A micro enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹1 crore and turnover does not exceed ₹5 crore;
b) A small enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹10 crore and turnover does not exceed ₹50 crore; and
c) A medium enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹50 crore and turnover does not exceed ₹250 crore.
d) All enterprises are required to register online on Udyam Registration Portal and obtain ‘Udyam Registration Certificate’

How to utilize the Business loan Proceeds?

Lulu Finserv would assess the credit worthiness of the applicant, approve, and disburse the Unsecured loan or mark a hypothecation lien on the Stocks, Receivables, Assets as security. Collateral of property will be insisted based on the product norms. Lulu Business loans can be used to meet any business-related expense without restriction.

Business owners can use the capital to:

  • Fund business expansion or diversification
  • Improve existing business set-up
  • Consolidate high-interest business debts
  • Boost working capital reserves
  • Purchase and stock inventory
  • Buy new machinery, equipment, or software
  • Capitalise on business opportunities

Eligibility criteria for Business Loans

Individuals / Self-employed professionals [Firms / Companies or any other legal entity engaged in manufacturing / Service Trading are eligible to be financed under the scheme. New or existing units can be considered under the scheme and the net worth of the borrower/s shall be positive. Take over loans are also permitted under the scheme. Borrowers enjoying other credit facilities with other Banks / FIs can also be considered under the scheme. However, it will be ensured that same asset is not already financed. Businesses filing GST returns shall be most preferred One Co -applicant is mandatory for all types of Business / MSME loans in the name of individuals and sole proprietorship concerns. Spouse / Family Member can be a co- applicant / Guarantor. Personal guarantee of all partners in partnership firms and major Directors in the case of companies. Owner of property shall invariably join as co-applicant. In order to qualify for business loans, you must maintain a good CIBIL score. Usually, the Bureau score stipulated by NBFCs for Business Loans is at least 650.

Documents required for Business loans.

Loan Application form / CKYC Application form duly filled in with all details, photograph, and signature separately for Applicant, Co-applicant & Guarantor(s) The following are the list of documents normally sought by NBFCs for granting business loans.

  • KYC documents
  • Application form
  • Financials, ITR, GST Payslips, Bank statement etc, Latest LTR
  • 6 months latest banking transactions
  • Property documents copy (in case of mortgage loan)

Proprietary Firms / Partnership Firms / LLP / Private Limited Ltd / Public Limited Company.

  • Last 6 months GSTR
  • Last 3 Assessment Year Income Tax Return
  • Last 3 Financial year Annual Report
  • Financial statements projection for the nearest Financial Year based on the performance of past year.
  • Last 6 months bank statement.