We have "Business Loans" for you
Loading...
If you are planning to apply for a business loan and want to know the complete details for a business loan can see all the relevant details in the article below. Here we are going to provide you the details about the Business Loans. A business loan is nothing but a loan taken from the banks to invest on something on which you want to set up your business. You can borrow money from the bank for your small business and can repay them with some amount monthly with a fixed interest rate.
A loan which is particularly applied for the business purpose is Business loan. The customer has to repay this amount with interest to the taken amount with the decided interest rates. The applicants who are taking the business loans to own your small business, they also have to think about their personal credit scores. As the personal credit scores will also impact by taking these Business loans. If the applicants are using their personal credit cards to invest in their business then debt taken for business also affects personal credits. Before applying for the business loan know the required eligibility to avail a business loan. The following uses of business loan are :
To purchase land or space for business operations
To purchase equipment, machinery and raw materials
To pay rent, salaries, hire employees, staff training etc.
For office renovatio
For business growth or relocation
When you take a loan for your business and provide an asset (your home, other business etc.) as a security to the bank/finance company is an secured business loan. The bank/finance company offered lower interest rates for secured loans compared to unsecured loans, making it much more beneficial. However, if you default in your payments, you will have to leave the assets given to the bank / finance company as security.
Loans can be great solutions for businesses that don't want the hassle that often comes with finding an investor or business partner. However, ensuring that you will be able to pay back the amount that you borrow is essential because your assets could be taken from you as collateral if you fail to make the repayments.
1. Flexibility of loan tenure
2. Higher tenure to suit your capital expenditure requirements
3. Higher loan eligibility
4. Required minimal documentation
5. Competitive interest rate
6. Accessible and Convenient
7. Short-term option.
8. Expanding your product range.
9. Create the infrastructure.
10. Stock or working capital
Use the fund for any business-oriented purpose depending on your requirements
1. Lower-interest rates, when compared to other premium loan products in the market
2. Easy repayment options, in the form of fixed monthly EMIs
3. Easy to avail and no need for submitting collateral
4. Helps your business gain an edge over your competitors
There are various reasons companies require finance, though upgrading necessary machinery and improving cash flow are some of the most popular reasons. Here are some common reasons companies apply for a business loan:
1. Starting your business
2. Running your business
3. Expanding your business
Listed below are a few points that you should consider before availing a business loan:
Choose the right type of business loan
Assess how much money you need
Prepare a cash flow forecast
Improve your credit score
Look for flexible repayment terms
Compare multiple lenders
Listed below are a few points that you should not consider before availing a business loan:
Apply for more than one loan at a go
Borrow more than you require
Neglect carrying your financial papers
Hide your liabilities from the lender
Underestimate your business expenses
Choose a very short tenure
Focus on the interest rate alone
To apply for a business loan, you have to pay fees and charges applied by the Bank. It covers all charges and fees made by a bank to their customers.The following charges are taken from the Bank is joining fee, annual fee, interest rate, late payments charges etc.
|
TYPE |
CHARGES |
|
Interest rate |
10% to 12% |
|
Loan Amount |
Rs.50000 to Rs 50 lakh |
|
Tenure Period |
1 years to 10 years |
|
Processing Fee |
Upto 2.50% of the loan amount |
|
Prepayment Charges |
No pre payment permitted until repayment of 6 EMIs After 7 EMIs : Upto 4% on the balance |
|
Late payment of EMI Charges |
Upto 3% p.a. on EMI/ Principal overdue |
Anyone can get a business loan with or without security. This only depends on the bank's rules which are offering you a loan amount and along with the risk on the amount they are ready to take. Everything matters when you are applying for a business loan like you are taking a loan to start a new business or you are applying it for extending the running business. This makes differences in surety. You will get your loan amount very soon if you meet all the required eligibility criteria once the documentation is done.
|
ELIGIBLE |
Self employed individuals, Proprietors, Private ltd. Company and partnership firms |
|
AGE |
21 years to 65 years |
|
TURNOVER |
More than Rs.25 crore |
|
EXPERIENCE |
Total experience is 5 years Individual who have been in the current business for a minimum 3 years |
Any applicant who is going to avail a business loan must have to submit the following documents. These documents are the requirements for the lenders who are providing you the amount of loan.
1. Signed Application Form : The applicants should submit the complete filled in application form provided to them by the lenders along with one passport sized photograph.
2. Identity Proof : To submit this identity proof, you can submit any one of the following like PAN Card/ Passport/ Voter Id card/ Driving License/ Aadhar card.
3. Residential Address Proof : For address proof you can submit any of the following as Ration card/ Telephone bill/ Electricity Bill/ Passport/ Sales tax certificate/ Lease agreement/ Trade License
4. Certificate and Proof of Business : Existence.Along with the above documents these are also the mandatory certificates to be submitted such as true copy of the certified articles of Association and memorandum, sole proprietorship declaration. Audited financials of the last three years.
5. Age proof : Voter Id/ PAN Card. Passport any one can be submitted for the proof of age.
6. Income Proof : Last 3 years ITR (income tax returns) (self and business), profit and loss account, balance sheets certified/audited by a CA. Last 12 months bank account statement (self and business)
Self Employed applicants who are non-professionals : Profit and loss balance sheets for the last two years need to be given which should be audited by the CA (chartered Accountant). Bank statements and It return copies of the last two years.
Professional & Self Employed individuals : Bank statements of the last six months and It return copies of the last two years. Balance sheets audited by the CA of profit and Loss.
Private Ltd. Co. & Partnership Self Employed : IT returns copies of the last two years and Bank statements of the last six month. P and L balance sheets audited by the CA.
1. Term Loan: Large lump sums of cash that are best for large purchases where it'd be advantageous to spread the large payment over a period of time
2. Business lines of credit: Large revolving lines of credit that are ideal for cyclical cash flow problems
3. SBA Loans :Variety of loans offered by different lenders that are guaranteed by the SBA, which reduces rates and fees but make the loans harder to qualify for than loans from online lenders
4. Business Credit Cards: Best for small, everyday purchases
5. Commercial Real Estate Loans: Ideal for real estate specific expenses
6. Equipment Financing: Best for purchasing large machinery or vehicles
7. Peer-to-peer lending: For borrowers who want lower rates than most online lenders but can't qualify with traditional lenders
8. Personal Loans: Easier requirements allow for startups to use personal loans as working capital
9. Invoice Factoring: For businesses that can't qualify for competitive term loans or lines of credit from traditional or online lenders and have invoices that aren't being paid on time
10. Merchant Cash Advance: Businesses with frequent and large volumes of transactions like retail stores will benefit from the lowest rates
You can use a business loan for the following purposes i.e. :
Increase your business cash flow
Lease bigger office premises
Renovate your office
Purchase, lease or repair machinery and equipment
Upgrade to the latest technology
Stock up on inventory
Hire seasonal employees
Purchase raw material for bulk orders
Expand to another area or city
Scale-up operations and take on bigger projects and much more
1. Offline Method
At the bank branch. - You can visit a branch of the bank from which you want to take a personal loan. You'll need to fill out an application form and submit it along with all the documents required.
Through an agent. – Banks have agents who sell personal loans.
2. Online Method
Fill up the online application form of business loan to apply.
Submit all the relevant documents to complete the process.
Get money in the bank within 24 hours.
Nowadays, banks are giving attractive schemes for women enterpreneurs. These lending schemes are exclusively for women and it gives them relief in terms of interest rates and collateral. Some of the banks also have special departments for women entrepreneurs where they provide them business consulting, training and counseling along with avenues for marketing and showcasing of their products. Women entrepreneurs whose ownership is less than 50% in the company are not eligible to avail the benefits of the women’s special schemes.
Some of the popular loan schemes for women entrepreneurs are as follows :
Mahila Udyam Nidhi Scheme
Mahila Samridhi Yojna
Cent Kalyani from Central Bank of India
Stree Shakti Package from State Bank of India
Shringaar and Annapurna from Bhartiya Mahila Bank
Dena Shakti Scheme from Dena Bank
|
BANKS |
INTEREST RATE |
|
15.65% to 21.20% |
|
|
16.25% to 19.99% |
|
|
12% to 16% |
|
|
10.65% to 16.25% |
|
|
8.30% |
Different types of business loans can be repaid in different ways. One of the easiest ways to repay a business loan is through Equated Monthly Instalments (EMIs). Your loan is divided into equal fixed sums that are paid on a monthly basis till the full repayment of the loan. An EMI consists of two parts, the principal loan amount and the accrued interest. Small and medium businesses find it easier to repay business loans with EMIs, as the method allows them to fund expensive assets and expansions without straining their smaller operating budgets.
Business loan EMIs are calculated using a very easy formula.
E = P x r x (1+r)n / (1+r) n-1
Where,
E = EMI amount
P = Principal amount
r = Rate of interest at which you will be borrowing the loan
n = tenure of the loan over which you will be repaying the loan.
A business loan is an unsecured form of credit designed to cover various expenditures in a business. Borrowers need not mortgage any asset to avail funds.
The processing fee charged by business loans is upto 2.50% of the loan amount.
The minimum tenure period is 1 year and maximum tenure is 10 years.
You can get a business loan from the lending institution of your choice in a number of ways, depending upon your convenience and the options offered by your lender.
Visit a nearby branch
Apply online via the lender’s website
Talk on call with the lender’s relationship managers
Send an email to your lender’s customer support mail address
Use the lender’s 24x7 virtual assistant feature
The loan amount charged by business loan is minimum Rs.50000 to Maximum Rs.50 lakh.
Interest rate charges are applied by business loan is 10% to 12%.
Yes, you can get a business loan without any collateral or security.
The maximum age of the applicant is required to get a business loan is 75 years.
Entities, self-employed non-professionals, and self-employed professionals can apply for a Business Loan, after fulfilling the required eligibility criteria.
You can apply for a business loan for any of the following or related purposes-
Small business finance
Working Capital finance
Home renovation
Business expansion finance
Yes you can avail a loan at any credit score but it inadvertently increases the interest rates. It is advisable that you should improve your credit score and then apply.
To avail a business loan, one must ideally have a CIBIL score of 700 or above. The same is true for both self-employed professionals such as doctors and engineers as well as self-employed non-professionals such as suppliers or manufacturers.
Last Updated on : 23/Nov/2020Know More About
You're eligible for a Business Loans if you:
Are legally adult enough to handle it
Have still got it
Get a regular pay check
Make more than a basic buck
Your eligibility depends on:
Earn more than minimum income required
Maximum allowed Business Loans is Rs. 10K to Rs. 45 lakhs
EMIs of other loans loweryour eligibility
Boost your eligibility by:
Pay off your credit card bills
Choose longer tenure loan up to 5 years
Nothing gets done without that paperwork (which we'll happily carry over to the bank for you, no sweat). Here's what you'll need:
- 1. Photo ID and age proof
- 2. Signed application form with photograph
- 3. Residence proof
- 4. Last 6 months bank statement
- 5. Documentation for salaried applicants:
- Last 3 months salary - slips
- Form 16 or Income Tax Returns
- 6. Documentation for self-employed applicants:
- Last 3 years Income Tax Returns with computation of Income
- Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account
Updated on 25 Nov 2017
| Business Loans Details | |
|---|---|
| Interest Rate (Monthly reducing balance) | 15.65% - 21.2% |
| Processing Fees | Varies with bank |
| Loan Tenure | year to 5 years |
| Pre-closure Charges | Varies with bank |
| Guarantor Requirement | Varies with bank |
Business Loans EMI Calculator