Self Employed? Here are the steps to get loans approved easily?
The applicant who opts for the loans needs to follow a particular set of regulations & guidelines to get the loan quickly approved. The borrower has to submit all the necessary documents to the lender to get the loan approved. Any financial institution always prefers lending loans to people with a stable bank balance, good CIBIL score, all the government id proof, employment/business proof stating the source of income, no criminal track records, or proceedings against the applicant filing of income tax returns. Etc. The borrower who maintains all the necessary documents and pays the income tax and credit installments on time then the borrower is said to be amongst the honest persons who deserve the credit limit to be extended.
The documents are required to be submitted differently according to the different needs. The other general criteria which the basis of which the loans can be approved or may be rejected are the age of an individual, type of employment of an individual, overall buying patterns of an individual reflecting on the bank statements, general nature of an individual related to behavior like if convicted to any crime in any stage of life or whether if an individual is a politically exposed person. Even the qualification of the individual matters sometimes though not always necessary still the better-educated applicants are given better preference as they mostly tend to earn money legally. Simultaneously, the un-educated class is most vulnerable to malpractices, though always it is not necessary. Entrepreneurs are always in need of money as they require huge funds to expand the business, grow as an entrepreneur, and take care of the family’s responsibilities.
Following are the tips to get the loans approved by an entrepreneur:
[1] Maintain all the documents to meet the eligibility criteria:
The borrower should submit all the documents like pan card, aadhar card, passport, driving license. Etc. Along with the passport size photograph and a form to be duly signed and filled up by the applicant. The borrower also needs to submit the shop act license, business pan, GST number, income statement with the turnover record, and the profit & loss statement being generated with the help of a tax consultant/ charted accountant.
[2] Maintain income tax-related proofs:
As per the RBI mandate, the borrower should file the income tax, and the same documents related to ITR returns be submitted to the lender for the last three financial years. The borrower should also adequately maintain sufficient bank balance into the bank account to give the lender confidence while providing the loans. The government of India collects the income tax to provide best-in-class facilities to the general public as well as for the smooth functioning of the government. Thus an individual who pays the income tax on time is regarded as the alert citizens of India. Also, the borrower who pays tax indicates that the individual earns sufficient income to satisfy their own needs.
[3] Maintain the books of accounts stating the turnover of business:
The entrepreneur should maintain all the financial records of the business displaying the turnover of the company. Also, the borrower should provide the profit & loss statement of the financial year annexure authorized by the charted accountant. As the business proof of the individual, the turnover statement plays a crucial role in the approval of the loans. Bank or a financial institution always prefers to extend the loans to the individuals who, in the case of an entrepreneur, are having a profitable business and thus having stability into their career, and who can sustain in the long run into the markets. The borrowers should have ample funds to sustain; thus, only, in that case, the lender can provide loans to the borrower.
[4] Ethical business values of an individual:
Suppose the business person is employed in a legal business and has a very good reputation. In that case, the chances are that honest taxpayers and honest entrepreneurs are always highly preferred customers for the banks. As the bank’s non-performing assets are increasing very rapidly, the banks are becoming extra cautious about the provision of loans to an individual as in later stage it becomes a big head ague to the bank to sell the assets and recover the money from an individual.
[5] CIBIL ratings of an individual:
The CIBIL ratings of an individual play a critical role in the approval of the loans. As it indicates the mentality of an individual towards the repayment of the credits. The borrower’s CIBIL ratings, if found poor, then the individual can improve the score by timely repayment of existing loans as well as can also pay on time bills of credit cards & opt for lower credits from the banks, thus to improve the CIBIL score of an individual.
Conclusion:
Hence it can be concluded that if the entrepreneur maintains a proper set of documents, proper invoices of the bills, ITR returns statements, business registration. It is very easy for the business-man to get loans. Thus for ethical entrepreneurs, it is never a big hurdle to get a home loan approved to buy a dream home.
