BUSINESS LOAN

The foremost priority of any entrepreneur is to see his/her business grow, expand and flourish. To fulfill this desire, business owners opt for business loans and meet their financial requirements. However, getting instant funds is not always possible, as banks and NBFCs take their time in deciding whether to sanction loan or not.

Business loans are majorly availed for purposes like business expansion, purchase of machinery or plant, investment in infrastructure, hiring staff, maintain inventory, etc. Further we have discussed all the relevant aspects of business loan for in-depth understanding.

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Frequently asked questions

Business Loan

Business Loan Interest Rates


Business loan interest rates start from 14.99% onwards which also depends on the eligibility of the applicant:

  • Minimum loan amount offered is Rs. 5000
  • Maximum loan amount offered goes up to Rs. 2 crore (can exceed depending on the requirements)
  • Minimum repayment period is 12 months
  • Maximum repayment period can go up to 5 years




Eligibility Criteria to Apply for Business Loan


Minimum age – 18 years Maximum age – 65 years Business Loans are offered to the following entities:

  • Retailers
  • Manufacturers
  • Traders
  • Sole Proprietorship Firms
  • SMEs, MSMEs and Large Enterprises
  • Partnership Firms involved only in Manufacturing, Trading or Service sectors
  • Self-employed individuals / professionals - CAs, Doctors, etc.
  • Private limited companies and closely held limited companies
Business Turnover, Operation History, Business existence, credit score and profitability criteria are defined by the respective bank and NBFC.




Features of Business Loan


Fixed Interest Rate : Business Loan Interest Rates are mostly fixed, which means the Interest Rate will not change for the entire loan tenure. The business loan interest rate offered by banks and NBFCs starts at 14.99% onwards and can go up to as high as 48% onwards, depending upon the loan amount or applicant’s requirements. Loan Amount : The loan amount that one can avail in business loan can be up to Rs 2 crore and even more depending on the requirement of the business. The loan amount mainly depends on the financial credibility of the applicant and financial institutions check the eligibility of the applicant before lending the amount. Moreover, financial institutions like banks and NBFCs review the applicant’s credit history/score, Identity proof, business location, business existence, income details before loan sanctioning. Collateral Free Loan : Business Loans being unsecured loans do not require any collateral from the applicant. However, there are specific and very few loans in which plant, machinery or raw material need to be provided as collateral. Applicant does not require providing any asset like car or house to avail business loan. Flexible Repayment tenure : The loan applicants enjoy flexible repayment tenure that goes up to 5 years, making it more preferable over other loans. The applicant also have an option of loan pre-payment in which he/she can foreclose the loan by paying some additional charges defined by the respective bank or NBFC.




Documents Required for Business Loan


  • Recent Passport-sized Photographs
  • Identity Proof - PAN card, Aadhaar card, Valid passport, Voter's ID card, Driving License
  • Address Proof - Voter's ID card, Aadhar card, Passport, Driving license, Utility bill, Water Bill, Electricity Bill
  • Business Address Proof
  • Proof of business existence for last 3 years
  • Last 6 months' bank statement
  • Last 3 years’ Income Tax Return (ITR)
  • Balance sheet and Profit & Loss account statement
  • Financial documents audited/attested/signed by Certified CA
  • Copy of Trade License
  • Sales Tax Certificate
  • Certified Copy of Partnership Deed
  • GST Registration Certificate
  • Proof of ownership of the possessions used for business activities




How Business Loan is approved?


Like any other loan, business loan also analyses an individual’s creditworthiness by checking the repayment capability, business records, financial history and stability. The following is the handy checklist of business loan requirements; you must keep these things in mind before applying to bank for a loan:

  • You must be ready with a well-written business plan to submit to the lender
  • You must keep a decent credit/CIBIL score that shall range between 650-900 points
  • Ensure that you meet the eligibility criteria, business loan requirement and have all the required documents
  • Repay your existing debts at the earliest, if any
  • Have sufficient funds ready, in case the lender needs you to put something forward in advance
  • As you are applying for business loan, you must maintain an inclusive database of the company’s financial situation and past performance along with its cash flow statement
If you are applying for a loan for new business then you must focus on the ideas and presentation. With the above checklist, you will be able be go in right direction of acquiring the necessary funding for your business.




Benifits of Business Loan


  • Helps to increases the cash flow
  • Comes with flexible re-payment tenure
  • Higher loan amount can be availed
  • Collateral Free Loans
  • Get pre-approved loans from selected lenders
  • Availability of short-term loans, as well
  • Minimum paperwork
  • Quick disbursal




Frequently Asked Queries


Ques. I am 19 years old; can I get a business loan? Ans. Yes, any individual who is 18 years and above is eligible to avail business loan. Ques. How much is the minimum and maximum loan amount I can get? Ans. The minimum loan amount offered is Rs. 5,000 and maximum loan amount can exceed Rs. 2 crore, depending on the requirements. Ques. What is the maximum age of availing business loan? Ans. The maximum age of availing a business loan is up to 65 years. Ques. What is the interest rate offered under Business Loan? Ans. Interest rate offered by various banks and NBFCs starts from 14.99% onwards. Ques. For how long I can repay the loan amount? Ans. You can repay the loan amount in minimum 12 months and maximum up to 5 years, depending on the respective bank or NBFC. Ques. Do I need to submit any collateral to bank before applying for a business loan? Ans. No, you are not required to submit any collateral to bank or NBFC. Ques. What are the foreclosure charges and processing fees of business loan? Ans. The foreclosure charges and processing fees varies from bank to bank. Every bank and NBFC has different charges, so you need to check online from their official website. Ques: For what purposes business loan can be availed? Ans: Business loans can be availed for small or large scale businesses. If you are willing to start a new business, expanding the existing business, buy machinery and other capital goods, expand the business operations and purchase equipment you can apply for business loan from your preferred provider. Ques: What are the types of business loans in India that I can avail? Ans: There are different kinds of business loans offered by banks and NBFCs and that include loans for self-employed and MSMEs, Mudra loans, Loans under PMMY and Stand-Up India, Working Capital loans, Term loans, SIDBI loan scheme, invoice discounting, letter of credit, loan for equipment purchase, etc. Ques: Are there any business loans for women entrepreneurs? Ans: Yes, women entrepreneurs too can avail business loan which are specifically designed for women. Most of the banks and NBFCs offer women entrepreneur centric business loans.





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