Business Loan

Business Loans

Each business is unique and hence have specific requisites. Business loan plans offered by various banks and financial institutions across the country are customizable and customer satisfaction centric to offer business owners with a wide array of financing alternatives.

A small business loan is the safest and easiest option to appropriately finance your business objectives. Banks and financial institutions now offer tailor made loans based on the nature, scope and goal of your requirements.

Features of Business Loans

Business loans in India can be availed in the range of Rs.50,000 and up to Rs. 75 Lakhs. These loan applications usually get approved fairly quickly and sans any hassle during processing. Most banks and financial institutions provide their customers with the promise of secured lending solutions when it comes to business loans. Business loans come with the added benefit of services, such as, SMS, Web Chat, Phone Banking, etc. Some banks even extend exclusive higher loan amounts to their self-employed customer base.

With minimal paperwork and flexible repayment options, more and more business owners are leaning on business loans to fund their business needs.

Benefits of Business Loans

Unsecured business loans enable businesses to fund their exact exigencies and repay their loan amount in easy EMIs (equated monthly instalments). These loans can be availed for a variety of reasons, including but not limited to, business expansions, working capital, etc.

Banks and financial institutions offering business loans also provide their customers with the flexibility of doorstep service. Additionally, business loans in India usually don’t expect any collateral, guarantor or security from the applicant.

Some banks offer customers with the facility of business loan eligibility in 1 minute, either online or in any of their branches. These speedy approvals ensure that customers don’t waste any of their time waiting to hear from banks about the status of their loan application.

Business Loan Eligibility

Business loans are intended towards helping small businesses to meet their capital and other requirements. Broadly, the following categories of people can avail a business loan

Self Employed Professionals (SEP)

This category includes, Allopathic doctors, chartered accountants, company secretaries, architects, etc. This is subject to the applicants who have proof of qualifications and also are practicing their profession.

Self Employed Non Professionals (SENP)

This category includes traders and manufacturers.

• Entities

Following entities can avail a business loan-

• Partnerships
• Limited Liability Partnerships
• Private Limited Companies
• Closely Held Limited Companies

Furthermore, applicants have to fulfil the following criteria in order to be eligible for a business loan-

• Minimum turnover of Rs.40 Lakhs
• Minimum 3 years’ experience in current business
• Minimum 5 years of total business experience
• Business should be making profit for last 2 years
• Minimum Annual Income (ITR) is Rs.1.5 Lakhs per annum
• Minimum age of applicant is 21 years
• Maximum age of applicant is 65 years at the time of loan maturity

Documents Required for Business Loan

In order to apply for a business loan, you will require the following documents-

• PAN Card for company, firm or individual
• Proof of ID, in the form of, copy of Aadhar Card, Passport copy, Voter’s ID copy, driving license.
• Proof of address, in the form of, copy of Aadhar Card, Passport copy, Voter’s ID copy, driving license.
• Bank statement (last 6 months)
• Latest ITR along with computation of income, balance sheet and P&L account for the last 2 years. All financials must be CA certified or audited.
• Proof of continuation (ITR/Trade License/Establishment/Sales Tax Certificate)
• Sole Proprietorship Declaration or certified copy of Partnership Deed
• Certified true copy of Memorandum and Articles of Association

Interest Rate

Rack rates offered are usually in the range of 17% to 22%, though rates may vary from bank to bank. Usually a nominal processing fee is charged which can be up to 2.5% of the loan amount; subject to a minimum as well as maximum cap, depending on the bank. In some cases, a CIBIL Report Copy charge is levied.

EMI calculator

EMI calculators are the quickest and easiest way to calculate your EMI accurately. You are required to provide the calculator with some standard information. This may include, the loan amount that you require, the interest rate that will be charged to your loan, the duration you expect to take the loan for, etc.

Once you feed the above information into the calculator, the calculator will give you an estimate of how much you will be expected to pay each month as repayment instalments towards your business loan.

FAQ’s

• What security should I provide to avail a business loan?

No security or collateral is required in order to avail a business loan in most cases, though a thorough evaluation of your documents would be needed to confirm that.

• I am a doctor and have been practising for 10 years now. Can I get a business loan to set up my independent practise?

Yes, business loans are offered to all practising professionals, subject to proof of qualification being documented.

• Will I be required to share my personal information with the EMI calculator to calculate the EMIs on my business loan?

No, you will not be asked for any personal information while calculating your expected EMI. The EMI calculator only requires the loan amount that you intend to apply for, the tenure of the loan and the rate of interest.

• For what purposes can I avail a business loan?

You can apply for a business for any of the following or related purposes-

• Small business finance
• Working Capital finance
• Home renovation
• Business expansion finance
• Child’s education, etc.
• How long will it take for me to find out if I am eligible for a business loan?

Business loans usually are offered speedy approvals and most banks offer applicants with the convenience of business loan eligibility in 1 minute. This facility can be availed online or any of the bank’s branches.