Business Loan

What is a Business Loan?

A business loan is a secured/unsecured loan taken by a company for its growth or functioning and is the debt that the company is obligated to repay according to the loan’s terms and conditions. A business loan is procured to facilitate capital for business expansion, investing in infrastructure or starting a new business.

Why Borrow a Business Loan?

Few top reasons for which a business loan can be procured are

• Business expansion
• Business diversification
• Hiring fresh talents
• Working capital
• Invest in company infrastructure and assets
• Starting a new business

Features of Business Loan

Business Loan is a great option when it comes to expanding your existing Business or starting something new of your own. There are some salient features of Business Loan which you should know before applying for one, which includes the following -

• Collateral Free Loan : Business Loans are unsecured loans which mean that no security or collateral is required to apply for a Business Loan. One does not need to provide any asset like a car or a house to avail a Business Loan. The financial lenders review the Loan Applicant’s credit history, age, location, income details of the past few years and only then the loans are offered.
• Fixed Interest Rate : Business Loan Interest Rates are fixed, which means the Interest Rate will not change for the entire Loan Tenure. The Interest Rate of Business Loan starts from 14.99% onwards.
• Flexible Repayment tenure : The Loan Applicants can get a flexible repayment tenure up to 5 years, making it more preferable over other Loans.
• Loan Amount : The loan amount that one can avail in business loan can be up to Rs 50 Lakh. It mostly depends on the financial credibility of the borrower before offering the business loan.
• Minimal Paperwork and Fast Processing : Since loans can be easily applied online, it requires minimal paperwork. Only the necessary documents are required to apply for a business loan. Once the loan application is approved, the processing of the loan amount is followed by the disbursal.

Who Can Borrow a Business Loan?

If you need to apply for business loan and want a bank to consider your loan application, then it is necessary for you to meet the eligibility criteria of the bank. If you meet all the necessary eligibility requirements of the bank loan for business, then you are more likely to get the loan approval. So before applying for a business loan, you must check the following eligibility criteria:

For availing a business loan you must one of the following:

• Self-employed individual
• Limited or private limited firm
• Manufacturer or service provider
• You must be aged between 21 to 65 years
• You should be in business for at least 3 years
• Your business turnover must be at least 50 lakhs per annul with minimum 2 lakhs of profit
• You must submit the last 3 years of ITR statements
• Your business partner can be a co-applicant in your business loan application (which would increase the probability of getting a loan with acceptable tenure and interest rate)
• You must keep a favorable credit score that is between 700-900 points