Features of a Business Loan
Loan Amount: Ranges from small amounts (Rs.50,000) to 1 crores, depending on the lender and business requirements.
Flexible Tenure: Loan repayment periods typically range from 1 to 7 years.
Interest Rates: Varies between fixed and floating rates, typically ranging from 9% to 24% annually.
Collateral Options: Can be secured (requires collateral) or unsecured (no collateral).
Quick Disbursal: Funds are disbursed within a few days to meet urgent financial needs.
Customized Loan Solutions: Tailored products are available for startups, MSMEs, and large enterprises.
Prepayment Options: Many lenders allow prepayment with or without additional charges.
Online Application: Digital platforms enable easy and paperless applications.
Benefits of a Business Loan
Business Expansion: Supports scaling operations, opening new branches, or investing in new markets.
Improved Cash Flow: Helps manage working capital requirements and operational expenses.
No Profit Sharing: Unlike equity funding, loans don’t dilute ownership.
Builds Creditworthiness: Timely repayment enhances the company’s credit score for future borrowing.
Customizable Terms: Flexibility in repayment schedules and tenure to suit cash flow.
Tax Benefits: Interest paid on business loans is often tax-deductible under applicable laws.
Boosts Business Credibility: Financial backing can instill confidence in stakeholders and clients.
Eligibility Criteria for a Business Loan
Eligibility may vary by lender, but general requirements include:
Age: Applicant should typically be between 21 and 65 years.
Business Vintage: Minimum of 1-3 years of operational history.
Annual Turnover: Minimum turnover requirements differ (₹10 lakhs to ₹1 crore or more).
Credit Score: A good CIBIL score (750+) improves approval chances.
Business Type: Sole proprietorship, partnership, private limited company, or self-employed individuals.
Repayment Capacity: Verified through bank statements and income tax returns.
Documents Required for a Business Loan
Identity Proof: Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License.
Address Proof: Utility Bills, Rent Agreement, Passport, or Aadhaar Card.
Business Proof:
Certificate of Incorporation, GST Registration, or Shop & Establishment Certificate.
Partnership Deed (if applicable).
Financial Statements:
Audited Profit & Loss Statement and Balance Sheet (for the last 2-3 years).
Bank Statements (6-12 months).
Income Tax Returns: Filed ITRs for the last 2-3 years.
Loan Application Form: Completed and signed form with photographs.
Collateral Documents: If the loan is secured, proof of ownership for pledged assets is required.