A business loan is a loan taken by a borrower with the intention of using it for the expanding their businesses or setting up a new business; it is essentially capital for business. Like any other loan, when loan for business is taken the borrower agrees to pay back the borrowed amount along with interest at agreed rate within the stipulated time.
Working capital,Term loans,Overdrafts and start-up loans
In order to understand what business finance is we need to know a little about different types of business loans:
Terms loans can be short term or long term and intermediate loans. The term can vary from 3 years for a short term loan to 10-15 years for a long term. These loans are usually taken to finance expansion or set up a new unit.
These loans are required by the business to meet its day to day financial requirements. Getting timely access to working capital is important for any business. Different modes may be used to finance working capital needs.
An overdraft is a temporary loan; the account holder overdraws from his current account as per agreed terms and conditions. Higher rates are applicable when the overdraft exceeds the limit.
Some financial institutions may have special provision for lending to start ups. The lender has to like the business plan and idea and may ask for some assets as collateral. In such a situation the banks will assess the credit history of the promoter of the business, his back ground, assets and liabilities, educational background, the business plan and its feasibility. There are special schemes and programmes to fund ventures by those new to the business.
Depending on the business loan requirements the applicant can decide which type of loan to take; the banks will also assess the requirement and then decide the amount of loan and its terms. Loans can also be short or long term, secured or unsecured and professional or trade loans.
ligibility criteria fixed by the FI may include minimum and maximum age, minimum turnover, years in business, profit for last 'X' years, minimum annual income etc. In case of a new business the eligibility criteria and required document list might vary a little.
Professional loans are given to self employed professionals like CAs, doctors, lawyers, designers etc. The lender takes a detailed plan both about repayment and utilization of money, usually collateral is required for such loans.
Assessing the requirement accurately and a sound business plan are cornerstones to getting and utilizing a business loan well.
|Business loan Banks||Interest Rates||Processing Fee|
|Axis Bank Business Loan||8.70%||1.50% to 2.00%|
|Kotak Mahindra Bank Business Loan||16.00%||Upto 2%|
|HDFC Bank Business Loan||15.65%||Starting from 0.99%, Max 2.50%|
|Muthoot Finance Business Loan||13.50%||Upto 1.5%|
|Bank Of Baroda Business Loan||14.10%||Upto 1%|
|Bank of Maharashtra Business Loan||14.50%||1% of loan amount, Min Rs. 1,000|
|Central Bank of India Business Loan||11.50%||3.00%|
|Corporation Bank Business Loan||13.55%||1.5%|
|ICICI Bank Business Loan||16.49%||Starting from 0.99%, Up to 2%|
|IDBI Bank Business Loan||13.00%||1%|
|Union Bank Of India Business Loan||13.55%||1%|
|Oriental Bank of Commerce Business Loan||11.40%||0.50% of Loan Amount|
|Punjab National Bank Business Loan||12.65%||1.8% + taxes|
|State Bank of India Business Loan||11.20%||From 2% to 3%|
|United Bank of India Business Loan||13.00%||1.15%|
|Syndicate Bank Business Loan||12.65%||0.5%, Min Rs. 500|
|Dena Bank Business Loan||10%||1%|
If you want to apply for a business loan, then you need to meet bank's eligibility criteria. If you meet all the eligibility criteria, then your loan will be approved by the bank. One should check these eligibility criteria before applying for a business loan:
Self Employee professionals
Service provider or Manufacturer
Public or private limited firm
Age should be 21 to 65 years old
Should in the same business for at least 3 years
The turnover of a business should be Rs. 50 lakhs per year and profit should be Rs. 2 lakhs
Should have last 3 years ITR statements
1. Axis bank
2. Kotak Mahindra Bank
3. HDFC Bank
4. Bank Of Baroda
5. Muthoot Finance
6. Corporation bank
7. ICICI Bank
8. Central Bank of India
9. IDBI Bank
10. Punjab National Bank
11. Union Bank of India
12. United Bank of India
13. Oriental Bank
14. State Bank of India
15. Dena Bank
16. Syndicate Bank
17. Bank of Maharastra
The below are the steps to choose the best business loan:
Step 1: Submit all the required documents to the bank.
Step 2: Estimate how much money is needed for now and how much money will need in future.
Step 3: Take Expert's help.
Step 4: Check other charges and fees of each bank.
Step 5: Decide whether you need an quick capital or a long term business partner.
Step 6: Ask the right question and clarify your doubts regarding the business loan.
When it comes to the business expansion, business loan is the best option.
Flexible repayment tenure
The loan applicants can choose loan tenure up to 5 years.
Fixed Interest rate
Business loans rate of interest is fixed which means the rate of interest didn't changed for the entire tenure of a loan. The Business loan interest rate is starting from 14.99% on wards.
One can get loan amount up to Rs.50 lakhs. It can be based on the financial capability of a borrower.
Collateral Free Loan
Business loans didn't require security which means these are unsecured loans. You no need to provide a property or car to get a business loan. The lenders can review the applicant's age, credit score, location and last 2 years income details to sanction the loan.
Minimal Documentation and Quick Processing
One can easily apply these loans online. It required minimum documentation. Once the loan application is approved, the loan amount will be credited to the borrower's account.
1. Why should you take a Business Loan?
Business loans are availed for large and small businesses. If you want to start a new business or expanding the existing one, buy capital good or machinery or purchase equipments, apply for business loans.
2. What are the Business loan tenure options?
The loan tenure for business loans are up to 5 years depending on the applicant's repayment capacity.
3. How long does it take to avail a loan?
After submission of all required documents, the business loan will be approved within 72 hours. The application process is simple and hassle free.
4. How is my business loan eligibility calculated?
Business loan eligibility is calculated on the repayment capacity of a borrower, credit score and annual income.