Business loans are designed to help small businesses and entrepreneurs meet their capital requirements. There are over 20 banks and financial institutions in the country that offer tailor-made business loans at attractive interest rates to suit your financial requirements.
RBI will inject a total of Rs.3.74 lakh crore of which Targeted Long-Term Repo Operations (TLTRO) will be worth Rs.1 lakh crore. Cash Reserve Ratio (CRR) cut of 100 basis points to 3% of net demand and time liabilities worth Rs.1.37 lakh crore, and accommodation under Marginal Standing Facility hiked from 2% of Statutory Liquidity Ration to 3% worth Rs.1.37 lakh crore.
RBI will also inject liquidity which will be 0.5% of the GDP out of which Rs.50,000 crore will be reserved for the second phase of TLTRO, and additional refinancing of Rs.50,000 crore by NABARD, SIDBI, and SHB.
Yes, your business will be considered a small enterprise and hence you can avail investment of up to Rs.10 crore.
Yes, you will be given a repayment tenure of 4 years including a moratorium period of 1 year.
Your business unit will be considered as medium enterprise and you can avail investment of up to Rs.20 crore.
The Central Government finally decided to alter the long-standing definition of MSMEs and increased the investment limit. As per the new definition, units with investments up to Rs.1 crore and turnover up to Rs.5 crore will be considered as micro enterprise.
No, trade fairs and exhibitions will not take place anymore. Infact, MSMEs will be provided with e-market linkage and will be promoted as a replacement for trade fairs and exhibitions. Fintech will be the tool which will be used in order to increase transaction-based lending by using the data generated by the e-marketplace.
| Lender | Interest Rate | Loan Amount | Loan Tenure |
|---|---|---|---|
| HDFC Bank | 15.65% p.a. to 21.20% p.a. (Rack interest rate) | Rs.50,000 to Rs.50 lakh | 12 months to 48 months |
| IIFL | 18% p.a. to 25% p.a. | Rs.1 lakh to Rs.50 lakh | 12 months to 48 months |
| Fullerton India | 13% p.a. to 16% p.a. (floating) | Up to Rs.50 lakh | 12 months to 48 months |
| DHFL | As per the lender’s terms and conditions | Up to Rs.20 crore | Up to 5 years |
| Magma Fincorp | As per the lender’s terms and conditions | Rs.2 lakh to Rs.2 crore (will vary based on the scheme type) | 12 months to 60 months (will vary based on the scheme type) |
| Kotak Mahindra Bank | 13% p.a. onwards | Rs.3 lakh to Rs.2 crore | 12 months to 60 months |
| Karnataka Bank | 10.3% p.a. onwards | Up to Rs.500 lakh (will vary based on the type of scheme) | Up to 120 months (will vary based on the type of scheme) |
| Tata Capital | 19% p.a. onwards | Rs.5 lakh to Rs.50 lakh | 12 months to 36 months |
| State Bank of India (Simplified Small Business Loan) | 8.25% p.a. onwards | Rs.10 lakh to Rs.25 lakh | Up to 60 months |
| Mahindra Finance (Unsecured Business Loans for SME) | 17% to 19% p.a. onwards | Rs.1 lakh to Rs.5 lakh | Up to 12 months |
| Federal Bank (Asset Power Scheme – Business Loans for Professionals) | 12.3% p.a. to 15.35% p.a. | Up to Rs.2 crore | Up to 84 months |
| Standard Chartered Bank (Business Installment Loan) | 17.25% p.a. onwards | Rs.10 lakh to Rs.75 lakh | Up to 60 months |
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| Up to 2.5% of the loan amount (subject to a minimum fee of Rs.2,359 and maximum fee of Rs.88,500) | Rs.17,579 | Rs.6,32,827 |
|
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 16% p.a.
Penalties/Internal Charges
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| Up to 3% of the borrowed loan amount | Rs.18,076 | Rs.6,50,743 | 4% of the loan amount |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 18% p.a.
Penalties/Internal Charges
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| Up to 6.5% of the borrowed loan amount | Rs.18,076 | Rs.6,50,746 | 4% of the loan amount |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 18% p.a.
Penalties/Internal Charges:
Benefits/Key Highlights:
| Lender’s Name | Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|---|
| DHFL | 2% of the borrowed loan amount plus applicable tax | Will vary based on the loan amount, interest rate, and loan tenure | Will vary based on the loan amount and total interest charged | As per the lender’s terms and conditions |
Penalties/Internal Charges:
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| As per the lender’s terms and conditions | Will vary based on the loan amount, interest rate, and loan tenure | Will vary based on the loan amount and total interest charged | As per the lender’s terms and conditions |
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| Up to 3% of the borrowed loan amount plus tax | Rs.17,089 | Rs.6,15,197 | 5% or 6% of the amount paid |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 14% p.a.
Penalties/Internal Charges:
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| As per the lender’s terms and conditions | Rs.44,424 | Rs.5,33,093 | As per the lender’s terms and conditions |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 1-year term at an interest of 12% p.a.
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| As per the lender’s terms and conditions | Rs.25,204 | Rs.6,04,903 | As per the lender’s terms and conditions |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 2-year term at an interest of 19% p.a.
Penalties/Internal Charges:
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| As per the lender’s terms and conditions | Rs.23,537 | Rs.5,64,882 | As per the lender’s terms and conditions |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 2-year term at an interest of 12% p.a.
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| As per the lender’s terms and conditions | Rs.45,840 | Rs.5,50,080 | Nil |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 1-year term at an interest of 18% p.a.
Penalties/Internal Charges:
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| As per the lender’s terms and conditions | Rs.17,089 | Rs.6,15,197 | As per the lender’s terms and conditions |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 14% p.a.
Benefits/Key Highlights:
| Processing Fee | EMI (for Rs.5 lakh) | Repayment | Pre-Closure Charges | |
|---|---|---|---|---|
| As per the lender’s terms and conditions | Rs.18,076 | Rs.6,50,743 | 5% of the outstanding amount |
*Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 18% p.a.
To avail a business loan from a lender, you will need to check if you meet the eligibility criteria listed by the lender. Listed below are the general eligibility criteria to avail business loans:
In order to apply for a business loan, you will require the following documents-
Step1: You can apply for a business loan through online or offline channels. A number of lenders, today, give prospective customers the option of directly applying for a business loan through their official websites. To apply for a business loan online, you will need to visit the lender’s respective website, click on the loan product that you wish to apply for, and click on ‘Apply Now’.
Step2: Upon doing so, you will be redirected to another webpage, wherein you will be required to key in certain details into an online application form. You may be asked to enter your name, age, contact number, city of residence, details about your business, etc.
Step3: Once you key in the required information, you can click on ‘Submit’ to submit the online application form. A representative from the bank/financial institution will contact you to take the loan application process forward.
Step4: You can also choose to visit the nearest branch of a bank or financial institution and directly apply for a loan through the branch. In this case, you will need to submit the loan application form along with the required supporting documents at the branch.
Step5: Once the lender verifies your loan application and documents, your application will be approved, after which the loan amount will be disbursed into your account.
There are multiple reasons for applying for a business loan. However, you should opt for this scheme only when:
Business loan for special needs
If an entrepreneur has a business idea that he or she wants to turn into an endeavour with potential income, a business loan can be availed in such a scenario to meet his or her financial needs. However, in order to ensure your loan gets approved, you should make sure that your idea is good enough to generate substantial profits in order to repay the loan interest. You should also make sure that the overhead cost of the business is not high enough to cause a negative impact on the business and its profitability.
Opting for a business loan is a great way to arrange for the funds required during the expansion of an organisation. Business expansion can include starting a new department, launch of a new product, upgrading an operation or product, venturing a new area or market, etc. Additionally, the chances of loan approval for an existing business are usually high owing to the fact that it holds a proven track record.
When dealing with a high-demand product, it is essential for the business to maintain a regular supply to the market. In order to do this, the organisation might have to increase production by investing in equipment and machinery with the latest technology. Furthermore, a company might also need to buy equipment during an expansion. Business loans are a great way to meet credit needs during such a situation.
It is difficult for small companies to ensure there is a healthy amount of cash flow within the organisation. Therefore, a business might face a shortage of money to fulfil its liquidity requirements for a working capital such as utility bills, overhead salary, inventory management, rent, etc. However, this problem can be solved if a business owner opts for a loan to meet the company’s temporary financial crisis.
When the cash flow is low within an organisation due to reasons such as market boom and increase in operating cycles, it is difficult to manage regular expenses such as salaries, supplies, and raw materials. In order to keep the business running and to recover from such a financial crisis, an entrepreneur might decide to avail a business loan and keep the business operational.
A business loan can also be availed to receive the funds required in order to make a business that has been incurring losses profitable. Even though many lenders are sceptical when funding a less successful/unsuccessful business, corporate applicants with a practical plan that includes major changes in business operations or introduction of a new product might convince them to do so.
It is always a smart move to repay multiple small debts using a large loan in order to avoid paying a huge amount of money as interest. A businessman can also choose to do the same by availing a business loan.
If you are operating a business that is in demand only during a certain time of the year then it might be difficult for you to manage the expenses when the orders start rushing in. In that case, you can secure a short-term business loan to offer undisrupted service to your customers and can repay the loan using the profit earned after the peak season is over.
A few types of business loans are as follows:
In an overdraft facility, the business owner can withdraw a larger sum than the amount present in the account as a loan to meet his or her business needs. The maximum amount that can be withdrawn and the interest rate under this facility is based on a mutual agreement between the lender and borrower.
In case of a term loan, a borrower can avail a secured or unsecured loan to receive the funds according to the situation and requirement of the business. These loans are helpful in acquiring long-term assets. There are three types of term loans based on tenure namely short-term loan, long-term loan, and intermediate loan that can be repaid on a monthly or quarterly basis. While the rate of interest for such loans can be fixed or floating, it varies according to the loan repayment tenure.
When an entrepreneur withdraws a demand loan to meet the financial requirements of his or her business, the amount has to be repaid whenever the bank or non-banking financing company (NBFC) recalls it. Demand loans can be both secured and unsecured and are ideal to meet a short-term financial crisis. While the maximum term for this type of a business loan can be 12 months, the merchant can choose to renew it when the term has ended.
At the time of a financial crisis, a business can also decide to opt for a loan against its financial securities that are approved by the bank such as mutual funds, fixed maturity plans, insurance policies, savings bonds, demat shares, exchange-traded funds, etc.
This type of financing scheme can be availed by a business based on the creditworthiness of the buyer’s bank when the buyer and the seller do not know each other such as during international trade transactions. In this case, the bank pledges on-time payment to the seller after taking account of its origin certificate, insurance certificate, transportation documents, legal documents, and other commercial documents. However, if the buyer fails to make the payment, the bank is liable to pay the entire outstanding amount.
The cash credit facility is an overdraft loan that can be availed by a business to finance its need for working capital by offering its current assets such as receivables, inventory, etc. as collateral. The maximum amount that can be withdrawn using this scheme is dependent on the stock margin fixed by the bank. The tenure of this loan can be renewed at regular intervals of 12 months.
Whether you own a public/private limited company or proprietorship/partnership firm, you can avail this pre-approved secured loan by offering residential, commercial, or industrial property as collateral. This financing scheme helps companies secure down loans, buy the required equipment, or cover any additional costs that will help the organisation grow. In this kind of a business loan, the financing company promises to pay the stakeholders of the guaranteed business in case it defaults.
In a bid to promote women empowerment, numerous banks and NBFCs offer special loan schemes to existing and potential women entrepreneurs. These exclusive schemes offer a lot of benefits and special discounts in terms of quantum of loan, interest rate, security, etc. Furthermore, female entrepreneurs can also benefit from the consulting, training, and counselling offered by several lenders to help them learn about various aspects of the market and industry. However, these loans are only available to women who hold more than 50% shares of a company.
Before you choose to apply for a business loan to start a new business or expand the current one, you should learn about the features of a business loan.
Listed below are a few points that you should consider before availing a business loan:
The above-mentioned points are a few things that you should take into consideration when applying for a business loan. Also, it is in your best interest to compare at least a few business loans that are offered by different lenders and opt for one that suits your requirements.
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.
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. If you are required to submit security or collateral, you can check the lender’s terms and conditions to know what is generally accepted.
2. 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.
3. Will I be required to share my personal information to use the EMI calculator to calculate 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.
4. For what purposes can I avail a business loan?
You can apply for a business loan for any of the following or related purposes-
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.
A GST rate of 18% will be applicable on banking services and products from 01 July, 2017.
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