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Business Loans in India

Business Loan is one the great way to increase financing towards various business needs. There are many banks that offer loan upto 30 lakhs with and without collateral with pre-approved offers. It is the money that is credited to your account with certain percentage of interest and fixed tenure for repayment. This amount can be used for expansion of existing business or the start a business from the scratch. According to the needs of the business, the loan amount will be approved by each bank.

Purposes of a Business Loan

The main purposes of opting for a business loan are listed below:

  • To expand the business
  • To expand business location
  • To start a whole new business
  • To build credit for future requirements
  • To purchase equipment for business
  • To purchase more inventories
  • To bring in fresh talents to the business

Types of Business Loans

The different types of business loans a business owner can get are mentioned below. Main use of this list to choose the best one that serves your purpose.

  • Line of Credit Loans
  • Installment Loans
  • Balloon Loans
  • Interim Loans
  • Secured And Unsecured Loans
  • Letter of Credit
  • Alternative Financing

Different Business Loans You can get in India

Business Loans for Start-ups and New Businesses

Many people who are planning for a business wonder do banks provide loan for new business- the answer is yes, it does. Every new business can apply for loan for working capital as per their requirements. Loan is for provided for startups for research and development of technology, for buying equipment and technology, for stocking inventory with and without collateral or security. There are even specific schemes and offers provided by banks for new businesses.

  • Banks are more approachable than venture capitalists
  • Banks don’t require equity dilution
  • Banks have structured framework for funding various requests
  • Banks don’t need any share of your profits/ loss

Business Loans for Bad Credit

Are you concerned about bad credits? It is not a show-stopper for availing a bank loan for your business. There are banks that are ready to offer banks loan even if the credit rating is poor. This is possible with your revenue status, the type of business, loan requirement as compared to the assets of the company- if the assets of the business have more value than your loan requirement; you have good probability to get a loan.

Business Loan for Women Entrepreneurs

In the last few decades, women owned businesses have increased in India. The growth and emergence of these women-owned companies have greatly funded towards economic development of India. Here most women-owned companies are connected with the service sectors.

Women-owned companies have not only created a way for economic individuality but similarly, have created infinite job openings for everyone. Small business and Enterprises development programs have an important role in economic development of the women in our country. But, it is a fact that women businesspersons have faced a lot of problems with regard to funding. A female businessperson should have detailed knowledge about the funding arrangements and sources while deciding to secure a business-loan. Investment is the support of a business, lack of sufficient financial support puts the business to difficult situations. Some schemes exclusively for women for business loans are Annapurna scheme, Stree Shakthi Scheme, Bharatiya Mahila Bank, Dena Shakti Scheme, Udyogini Scheme, Cent Kalyani Scheme, Mahila Udyam Nidhi Scheme, etc.

Business Loan for Expansion or Working Credit

Has your small new business had a ‘eureka’ moment which has excited you to expand it? Is funding an issue for growing your business? Make use of business loans for expanding your business. A good credit score, revenue details and other documentation will help you get the money you are in need of. Make use of the online services to compare facilities offered by different banks for expanding your business and choose a best one that has good features like low interest rate, maximum tenure, no hidden charges, and low processing fees and so on. Depending on the expansion requirement it is the duty of the borrower to decide whether they should go for a short term loan for a year or a long term loan that last for more than 3 to 5 years.

Features of Business Loans

Some important features of business loan are listed below:

Features Business Loan
Interest Charged Monthly in arrears
Interest Rate Fixed or variable
Interest Only Option Yes
Maximum Loan 80% of value (less existing debt)
Minimum Loan Term Fixed for fixed rate term
Maximum Loan Term 15 years
  25 years (residential security)
Repayment And Access Types Business Term Loan
Repayment Type Principal & interest or interest only paid in arrears
Repayment Frequency Yearly, monthly
Additional Repayments Yes
ATM Access No
Internet Banking Access Yes

Benefits of Business Loan

Accessible and Convenient – Accessible is the best feature of banks, it is very essential factor as well as there will be a need for regular conversations, depositing savings or any withdrawals. After being customer for a specific bank for years, the customer gains trust on the bank and simultaneously a good track record will help bank to be lenient with its customers too. This familiarization helps in having personalized services.

Multiple Loan Options – All banks promote various types of programs and schemes to encourage businesspersons set ups to make use of these. The actual earnings for all bank is from the rate of interest charges on loans. Few options offered are standard business loans, term loans and others as per the need.

Non Profit Sharing – Angel investors and venture capitalists agree to offer a loan with the agreement of having partly ownership on the business, they will thus get the right to powers of the business and in decision makings also they will share the profits of the business along with the business owner. On the flip side banks don’t put their hands into business money, everything you earned through your business is all yours. There is no share of profits or loss. Banks sanction a loan with the intention of getting their interest and partial loan-payment installments.

Lower Rates of Interest – Rate of interest in banks is low as compared to those of the lending agencies and few finance instruments such credit cards, etc.

Business Loans Offer Tax Benefits – Businesses taking bank loan can enjoy tax benefits, since the ratio of profits is used to pay the loan amount; it is exempted from tax calculations.

Business Loan Comparison from Different Banks/NBFCs Before making the final decision on your business loan provider, make sure the various factors are compared with other banks and NBFCs. The factors that should be considered are interest rate, which type of interest rate method is used, processing fee and other charges, EMI, what are eligibility criteria, is there a need for collateral or not, how reliable the bank is, what minimum requirement criteria are and so on.

Business Loan Requirements

  • Documents required for a business loan in India are mentioned below. Each of these are essential for applying a business loan:
  • Address Proof: Electricity bills, water bill, telephone bills etc
  • Bank Statement 6 Months
  • ID Proof: Passport, Voters ID card, Driving License and Pan Card
  • Proof of Continuity of Business
  • ITR & Statement Of Computation of Income – up to 2 Years
  • Board Resolution (If pvt ltd co. is Partnership Authorization Letter/ co-borrower {if partnership firm just co-borrower}
  • CA Certified or Audited P/L Acc Statement and schedules of P&L along with Balance Sheet – for last 2 years
  • Ownership Proof of Residence or Office
  • Latest ITR of the Co-Applicants – For last 2 Years

Pre-requisites of a Business Loan

The major 5 pre-requisites for applying for a business loan are mentioned below. Ensure you are eligible per each of these before applying.

#1 Good Personal Credit:

The credit worthiness of a person is evaluated per the CIBIL score, the higher the score is, the more worth and eligible the person.

#2 Good Business Credit:

For an existing business, the years of operation, the revenue pattern, credit worthiness is evaluated before considering for processing. Independent credit score for a company that is associated with the tax ID number and legally incorporated name is considered.

#3 Large Asset Base:

Having a collateral or security will help in easy processing of the loan, the lesser the risk is, faster will be the processing of loans by banks.

#4 Solid Business Plan:

Even if there is no existing business, having a great business plan with execution blue-print will be legally considered and scrutinized by the banks for offering a business loan.

#5 Industry Experience:

Though it’s rare to get loan for a business that has no experience, having industry experience will serve the purpose. Having ample knowing and experience in the industry is more than sufficient by banks.

How to Select the Right Business Loan?

The best 6 step of finding the right business loan is mentioned below:

Step 1: Complete all paper work well in advance.

Step 2: Draw an estimate of how much money is required now and how much is need for future.

Step 3: Seek for experts help.

Step 4: check for what is the fee, interest rates and other charges for each bank.

Step 5: Decide whether you need a long term business partner or just quick capital.

Step 6: Ask the right questions without hesitation.

How to Get Business Loan for Online?

There are a lot of safe and secure methods of applying for a business loan online. It is not just helpful in getting a loan but you can simply compare between various banks and what it offers. Giving few basic details like name, contact details, loan amount, type of business and income from business will give you a list of banks that can offer business loan, use this information to compare and apply. The application will be processed by banks and will contact you to the request to next level of processing.

How to Apply For Business Loan Online at Finance Buddha?

One of the easiest and smart ways to apply for a business loan through online is Finance Buddha, a one-stop solution provider for all business loan requirements is Finance Buddha. Here the details required for knowing more about your application:

  • Borrower name
  • Company name
  • Year of Incorporation
  • Loan amount
  • Turnover
  • Choose the city
  • Net profit after tax
  • Mobile number
  • Depreciation
  • Email ID
  • Partner salary

Do’s & Don’ts of Business Loan

There are always dos and don’ts for anything and everything, when it comes to applying a loan especially for your dream business, you should be extra vigilant. Here are few Do’s and Don’ts of business loan:

Do’s:

  • Provide all necessary documentation related to the loan requirement, if you have any existing business, includes it P&L and balance sheet statements
  • Keep all original documents handy like revenue slips, bank statements, tax payment receipts and other financial documents.
  • Keep a close watch on your credit rating and the business’ rating!
  • Don’t apply for too many loans, limit it as per the necessity
  • Ensure to make payment on all outstanding debt obligations and be aware of the penalties

Don’ts:

  • Don’t ask lender the income requirement, check these details well in advance through other sources
  • Huge purchases and outstanding debts will impact the loan approval, thus avoid the same.
  • Changing company legal name, partners’ details at the last minute will impact the approval of the loan and creates unnecessary complications
  • Don’t borrow from lenders, credit cards or other banks during the business loan approval process

There is nothing wrong in consulting a lawyer anytime you feel there is need for more personalized information. However do keep in mind there are lots of only service providers who can provide the same information at free of cost!

Tips

Not getting the desired loan amount

- Try adding multiple partner/director as a co-applicant alongwith the borrowing entity

Not getting the desired loan amount?

- Finance Buddha can try to do a debt consolidation/balance transfer to increase eligibility

 

Top Rated FAQs

What is the turnaround time for decisions a Loan against Property application?
Axis Bank will deliver its decision within 30 working days from the date of receiving of the application provided the request is complete in all respects. The calculation of 30 days shall start from the day on which the Customer delivers all documents ess read more Axis Bank will deliver its decision within 30 working days from the date of receiving of the application provided the request is complete in all respects. The calculation of 30 days shall start from the day on which the Customer delivers all documents essential for a proper appraisal of the application to the bank.
How is my loan eligibility calculated?
Loan eligibility is dependent on primarily the following factors: The credit score of the entity and/or the partner/director/proprietor of the borrowing entity as reflected in your CIBIL or Equifax report or any other credit bureau. Having a good credit read more Loan eligibility is dependent on primarily the following factors:
  1. The credit score of the entity and/or the partner/director/proprietor of the borrowing entity as reflected in your CIBIL or Equifax report or any other credit bureau. Having a good credit score is a necessary but not a sufficient criteria. If the credit score is a border line case then the bank may take a subjective call to limit the loan amount.
  2. The last 2 year financials of the borrowing entity. Factors like turnover, partner/director salary, depreciation, interest cost, net profit after tax are some of the key parameters that goes into deciding the loan amount.
  3. Ability to service the EMI for the current loan be requested as depicted by the Debt service coverage ratio (DSCR). Banks generally ask for a DSCR of 1.0 to 1.5 depending on case to case basis.
How long does it take to disburse the business loan?
Finance Buddha will work with the banks to try and get you the loan within 5-7 working days of submitting completed documents.

Reviews

I love banking with Citibank. Everything ranging from their online services to phone banking services is excellent. I always reach out to Citibank first for my requirements. They have solutions for all requirements. Recently when I was in urgent need of cash, all I had to do was to apply for a business loan through their only website and within 5 days all procedures were complete and money was remitted to my bank account.

 5/5

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 5/5

This is the 1st time am using a platform like Finance Buddha. Initially I was very worried about the reliability but then they offered best of best services and gained my trust. Now I got a business loan with 16.5% ROI without any issues Ð thank you Finance Buddha for being a helping hand during hard times.

 5/5

Am lucky to be introduced with Finance Buddha to get my business loan. I was hand-held right from the beginning and until completion of loan process and getting money in my account. With timely status update a very professional service was offered by Finance Buddha.

 5/5

From past 2 months am trying for a new business loan and I got best deals through Finance Buddha. They are very informative and co-operative. I was guided clearly with steps to apply for a business loan and got the same approved.

 5/5

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 5/5

I never thought getting a business loan will be this easy. Great thanks to Finance Buddha for offering such good platform for all loan requirements. I got business loans at 16% ROI and money was disbursed within 8 days of applying for loan. Very co-operative services were offered by bank staffs too.

 5/5

All employees or staffs in Finance Buddha are soft spoken. They are very co-operative and try to clearly understand customerÕs needs. I felt very comfortable dealing with them through for my business loan from HDFC bank.

 5/5

The best bank in India for new business loans is Citibank. I am saying this with my personal experience with the bank. Over the course of past 4 years, I have never default any payments and my CIBIL score was on the higher side. This helped me to get a business loan without any issues.

 5/5

I made use of the small business loan option offered by ICICI bank for its current account customers. The whole process was smooth and hassle-free. There was less need of documentations as I already have a current account with the bank. Bank was ready to compromise on the rate of interest on business loan as I am a customer with them from past 8 years.

 5/5

I was very skeptical about these online websites that help in getting loans. But after going through the reviews and feedbacks about Finance Buddha services, I decided to apply for a business loan through this platform. And was surprised to see all information offered by the website was accurate. This website has helped me with my business loan application and am happy with the service.

 5/5

HDFC bank offers very fast business loan services. I received the best rate of interest. The whole process was well managed by the Finance Buddha team. My sister has now applied for a home loan through this website. I will share the reviews for the same shortly.

 4/5

Very good service from ICICI bank. I got fast business loans. Even Finance Buddha team worked very hard to ensure everything is getting done at the right time. As they were very regular in updating me on the status of the loan, there was no need for me to make calls or visit the bank.

 5/5

Vijay did excellent loan co-ordination at Finance Buddha. Getting business loan is no more a tedious process- all you need to do is just visit Finance Buddha website, check for eligibility and apply for loan. Rest everything will fall in place as you expected and you can actually enjoy the loan application process if you are applying for loan through this website.

 5/5

I have figured applying for business startup loans through Finance Buddha is one of the smartest ways. If you are interested to save your time, efforts and money then you must try taking loan through Finance Buddha. Once you experience how good this platform will work for you, you will never think of other alternatives. All my loan related queries and concerned are now addressed by Finance Buddha- this is a one stop solution.

 5/5

Great Service! Keep it up Citibank. I love banking with Citibank and this is my 10th year with this bank as a customer. Looking forward for many more such great services. Am happy that I got a business loan with just 15% rate of interest.

 5/5

If you are looking for tension-free way of getting business loan quickly, then my recommendation is to opt for business loan through Finance Buddha. I donÕt think there is any other better way of getting a business loan in India in such user-friendly and reliable manner. It is worth to give this website 100% positive review for its service offered.

 5/5

I really donÕt mind spending some time to review the service offered by Finance Buddha. It not only gave necessary information for applying for business loan. But also helped me to check my eligibility, helped me to sort necessary documents for loan application and even offered facilities to apply business loan at various banks through online application form.

 5/5

I am trying such online platforms for the first time. Though I used these platforms for getting information regarding business loan, I had never applied for loan through these. Finance Buddha offers mind blowing services and I started to gain trust on these online platform. For all type of loan requirements, I will take the request through Finance Buddha for quick and valuable service.

 5/5

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 5/5