GSTTaxation

GST Business Loan

Looking for the best business loans banks offer in India? This article will look at how GST business loans work, why they are important, and how businesses can obtain them.

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The deployment of the Goods and Services Tax regime (GST) was one of the most significant changes to India’s taxation system in recent years. The government recently made it possible for businesses to use their GST returns to obtain high-value GST business loan.

These GST loans facilitate quick business financing, resulting in improved cash flow and financial flexibility for corporations. The best business loans also aid in the financing of working capital requirements, acting as both a short-term and long-term solution. 

What Is a GST Business Loan?

A GST business loan is a collateral-free loan in which the borrower is not required to mortgage any property as collateral. Financial institutions evaluate applicants’ borrowing capacity by reviewing their GST returns. Banking firms then approve a suitable GST loan based on their previous tax returns, resulting in faster loan approval and credit availability.

GST business loan approval does not necessitate the submission of additional financial documents, making such GST loans quick and simple to obtain. Who Can Avail a GST Business Loan?

Applicants can now obtain such GST business loans from a number of private and public sector banks. As a result, selecting the best business loan can be a difficult task. Furthermore, different banks have different credit limits for the amount of credit they will extend to businesses through a GST business loan.

The government has set a limit of ₹ 1 crore for business loans. The implementation of this new system will benefit business sectors ranging from manufacturing to distribution. Under the new scheme, the following business entities can obtain a GST business loan in India:

  • Public limited companies
  • Private limited companies
  • Partnership firms
  • Sole proprietorships

Furthermore, manufacturers, retailers, service providers, wholesalers, and traders who export or import products to and from India are eligible to apply for a GST business loan. Small and medium-sized businesses are more likely to receive such loans because they have the most difficulty obtaining funding. As a result, MSME business entities can obtain the best business loans from banks simply by submitting their GST returns.

GST number search

Documents Required for GST Business Loan

  1. PAN card
  2. Residential address proof: rent agreement/ driving license/ Aadhaar card/ voter’s ID/ ration card/ passport 
  3. Bank account statements of the last six months
  4. GST registration certificate/ company incorporation certificate/ shops and establishment certificate/ business PAN/ trade license
  5. Applicants applying for loans worth over ₹ 20 Lakhs, must submit the following;
  • Audited financial statements from the last two years
  • Income tax returns from the last two years
  • GST Returns of the past six months

What Is the 59-minute Government Portal?

The government has launched a new 59-minute website through which MSMEs can apply for a GST business loan ranging from ₹ 10 lakh to ₹ 1 crore. As the name implies, the entire process will be completed in an hour, providing businesses with quick and easy funding. The GST loan approval process has been updated to be completely automated and contactless. The interest rate on such loans starts at 8%, and the applicant is not required to provide any collateral. The distribution of such GST loans is linked to the Credit Guarantee Fund Trust for Micro and Small Enterprises Scheme, or CGTMSE Scheme. Funds will be disbursed in about a week after approval is granted.

This web portal makes use of advanced algorithms to prevent frauds and other issues and to verify all the details submitted by the applicants. The portal also connects with various banks, helping prevent physical meetings and visits. The GST loans will be provided mostly by the Small Industries Development Bank of India and other public sector banks, including the following;

  1. State Bank of India
  2. Punjab National Bank
  3. Bank of Baroda
  4. Indian Overseas Bank 
  5. Vijaya Bank

What Are the Steps Involved in Availing a GST Business Loan?

  1. First and foremost, MSMEs will have to register on the government portal by providing their email ID, mobile number, and full name.
  2. Next, the applicants must log in to the portal and provide their GST details and tax information as required.
  3. Applicants will then have to upload their tax returns and other financial documents in XML format. They also have the option of logging in using their PAN and incorporation date.
  4. Similarly, applicants must either upload or log in using their banking credentials to give the officials access to their bank statements.
  5. Next, they will have to provide details regarding the directors, partners and owners of the company. They must also furnish further details regarding their business, why they need the loan and whether they have taken out any loans in the past.

Lastly, the applicant must choose the appropriate lender, pay the required processing fees and wait to download a copy of the approval letter once the processing is complete. The only eligibility criteria for applying for such loans is that the business must be at least a year old, and must have monthly sales of at least ₹ 2,00,000.

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