Business Loan

A business loan is the need of the hour. It helps in expanding the current business, starting a new project, buying new equipment, purchasing assets and so on. Banks like HDFC offer business loans at the best interest rates. The interest rates and loan repayment tenure varies from bank to bank.

What is a Business Loan?

A business loan is financial assistance provided by the banks and NBFCs to meet the needs of the growing business. All types of businesses such as sole proprietorships, partnership firms, privately held companies, retailers, and self-employed individuals can avail these loans. Regardless of whether you are planning to expand your business or start a new venture, the banks will come to your rescue. Several financial institutions offer loans to start a new business. The banks and other financial institutions offer term loans and Flexi loans to suit the needs of the borrower. A bank business loan is offered up to Rs. 50 lakhs. However, credit history plays a crucial role in availing new business loans. A decent credit score makes the processing apart from attracting a better rate of interest.

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Types of Business Loans

Here’s all about 7 different types of business loans:

1. Term Loan: A term loan is availed generally for capital expenditure. This loan could be a secured or unsecured loan. The unsecured term loan ranges for a period of 1-5 years whereas the secured business loan is for 15-20 years.
2. Start-Up Loan: As the name suggests, a start-up loan is generally offered for new business ventures. There must be an established business and the applicant must submit proof of the business existence and registration. This loan can be easily availed as they are provided without any security or collateral. The other striking feature of a start-up loan is that if there’s a loan default, the company can be liquidated to repay the dues. 
3. Working Capital Loan: It’s majorly taken to meet the day-to-day operations of the running business. It helps in balancing the cash flow that’s required to run a business. A working capital loan is mostly opted for by manufacturers, wholesalers, service providers, retailers, and export and import traders.
4. Loan against Property for SME: These loans are given to businesses whose loan requirement is more than 50 lakhs. The applicant has to mortgage the property to avail this loan. The loan can go up to 70% of the current market value of the property. The loan tenure is up to 15 - 20 years based on the policies set by the financial lending institution.
5. Invoice Financing: This type of financing is especially for small businesses that face a gap between raising invoices and receiving payment from the clients. The invoice financing can go up to 80% of the invoice amount. The debt is cleared once the business receives the payment.
6. Equipment Financing: This loan is exclusively for manufacturing businesses as they would recurrently need equipment and machines. Usually, heavy machines are expensive and to purchase this equipment, heavy investment is required. The interest rates are lower for equipment financing when compared to term loans.
7. Business Loan for Women: There are exclusive business loans for women to encourage them to start new businesses. The Government of India also has initiatives to support women in small and medium-sized businesses. Women can avail of flexible loans, start-up loans, discounts on the standard interest rates, and a faster loan process. 

Features and Benefits

1. Fixed Interest rate: The interest on business loans are fixed, usually between 10.75% to 22.50% a year. As the interest rate is constant throughout the year, the borrower can plan investment and business operations wisely. 
2. Flexible Repayment Tenure:  It is an attractive feature that helps businessmen to plan the repayment tenure based on his/her financial conditions.  
3. Collateral free loans: One can avail best business loans without any security or collateral loans. You do not have to pledge any asset to get a start-up business loan. 
4. Loan Amount: An individual can avail maximum loan of up to 50 lakhs.  
5. Minimal Paperwork: An individual can also apply for online business loans by visiting the respective website. It requires minimal paperwork. 

Business Loan Paper Required:-

• 1. Pan Card
• 2. Aadhar Card
• 3. Passport Size Photo
• 4. Email Id
• 5. Ownership:- E-bill/House Tax/Water Bill
• 6. Shop Act/Udhyam/GST
• 7. 3 banking consider-Current A/C + Saving A/C (1year)

Business Loan Eligibility Criteria

• Business loans can be applied by manufacturers, service providers, self-employed
• The applicant must be between 21 years to 65 years.
• The applicant must have been in business for the last 3 years.
• The profit must be minimum upto 2 lakhs or yearly business turnover must be ₹50 lakhs.
• The applicant must have filed IT returns for the last 3 years to avail of a business loan.

Business Loan - Patnership Firm Paper:-

• 1. Pan Card
• 2. Aadhar Card
• 3. Passport Size Photo
• 4. Email Id
• 5. Ownership:- E-bill/House Tax/Water Bill
• 6. Shop Act/Udhyam/GST
• 7. 3 Banking consider-Current A/C + Saving A/C (1year)
• 8. Patnership deed
• 9. Firm PAN Card
• 10. GST 3B (1year)
• 11. ITR (2year) P & L balance sheet, com.
• 12. 2 Year Audit

Business Loan - PVT Limited firm Paper:-

• 1. Pan Card
• 2. Aadhar Card
• 3. Passport Size Photo
• 4. Email Id
• 5. Ownership:- E-bill/House Tax/ Water Bill
• 6. Shop Act/Udhyam/GST
• 7. 3 Banking consider -Current A/C + Saving A/C (1year)
• 8. Share Holding Pattern
• 9. Firm PAN Card
• 10. GST 3B (1year)
• 11. AOA
• 12. MOA
• 13. ITR (2 Year ) P & L Balance Sheet,com.
• 14. 2 Year Audit