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Frequently Asked Questions about Business Loans

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What is a Business loan?

Business loan is a 1-3 year unsecured loan given by banks, NBFC’s (Non Banking Finance Companies) or P2P lending platforms without asking for any collateral, guarantor or hypothecation of any assets. Entities like proprietorship, partnership, private limited company or public limited company are eligible for this type of borrowing. The usage of a business loan is left to the discretion of the borrower and can be used for working capital purposes, meeting short term cash flow requirements, investments into plant and machinery etc.
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.
Pre closure means that a customer wants to close the entire principal outstanding amount at one go. Whereas part payment means that a customer wants to repay only a certain portion of the outstanding amount. Please ask our advisor for more details on this when your loan is being processed.
Some banks have a lock-in of 6 months to a year while some banks allow you to pre close even after the 1st EMI has been debited from your bank. There may also be restrictions that you can only use your own funds (and not the balance transfer cheque of another bank) to pre close a loan. In addition, banks may allow pre closure at no cost or may levy a pre closure fee (2-5% of the amount being pre-closed). Please ask for clarifications to our or the banks’ loan advisor on all these factors before signing the loan document.
Some banks like Bajaj Finserv allow part payment. However, there can be restriction on how many times in a year you can part pay and the minimum and maximum amount that you part pay. Again, please ask for clarifications to our or the banks’ loan advisor on all these factors before signing the loan document.
Generally, the minimum amount loan amount is Rs 100,000 and maximum amount is Rs 40,00,000. Higher loan amounts are dependent on a personal discussion that a bank may want to have with the borrower and then take a call on the loan amount.
Finance Buddha will work with the banks to try and get you the loan within 5-7 working days of submitting completed documents.
Borrowing entity's PAN card, address proof, last 2 years financials (balance sheet, profit & loss, audit report), last 6 months bank statement, VAT/service tax returns, partnership deed/MOA, existing loans repayment track record. Additionally, the partner/director's PAN Card, KYC, own house proof, ITRs etc. On case to case basis additional documents may be required.
All business loan repayments happen in the form of an EMI (Equated Monthly Installment) through the customers bank account. The customer needs to give few PDCs (Post dated cheques) and sign an ECS mandate in favour of the bank disbursing the loan.
The bank will levy certain ECS bounce charges/penalties. In addition it will get reported in your credit report. Depending on the severity of the default it can have serious impact on your future credit possibilities like a home loan, car loan etc. In addition, the banks can also take legal action against the borrower.
The rate of interest varies from 16% to 23% and a processing fee of upto 2.5% of the loan amount. In addition some banks insist on an insurance cover also.
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.
At Axis Bank, you can get a Loan against Assets from Rs. 2 lakhs to Rs. 500 lakhs. Some of the factors we study when deciding a loan amount are: • Your requirement and eligibility • The property’s registration • The property’s market value • Your income and repayment capacity
Yes! Axis Bank offers LAPs for waged NRI customers.
Yes, Axis Bank charges a non-refundable handling fee for every LAP application. The processing cost of a benefit of an Axis Bank Loan against Assets is up to 1% of the loan amount plus service tax as pertinent.
The EMI will be due on a permanent date each month. You will be alerted of this time when your loan amount is paid.
Once your loan account is closed, you may collect your property papers after 16 days from your adjacent Axis Bank Loan Centre.
Before we work with the foreclosure, all unresolved dues must be cleared. So we request you first to check for and clear any residual amount that may be payable towards your Home Loan by applying for a foreclosure report from your nearest Axis Bank Loan Centre.
You may up-to-date your mobile number and email id in either of the following ways: By calling any of the toll-free numbers: 1800 209 5577 or 1800 233 5577 or 1800 103 5577. Using your registered email id to write to loans@axisbank.com
Yes! An Axis Bank Loan against Properties can be availed of either as a Term Loan with an EMI repayment selection or as a Dropline Overdraft Facility.
Axis Bank Loan against Property can be availed for a self-occupied house or commercial property.
Make use of the Finance Buddha eligibility form to check your eligibility before applying for a loan.
It can be repaid through post-dated cheques or through ECS.
You can avail loan up to 48 month it you meet the necessary criteria.
Loan can be taken up to 30 Lakhs for tenure of maximum 4 years
Money will be credited your account within 72 hours once the loan amount is approved.
There are no fore-closure charges and the business loan can be fore-closed any time after making the 1st EMI.
There is no interest charged on the amount that is pre-closed. Only on the outstanding amount interest are applicable.
Yes, existing customers can avail the option of pre-approved loans.
You can apply for a loan when you are in between 25 to 65 years of age.
No, there are no charges implied on the customers of Finance Buddha. This platform offers services for absolutely FREE!
• Complete loan application form with one passport size photograph • Valid Proof of Applicant's Identity: Passport, PAN card, Voter identity card , Driving license • Proof of Residence: Ration card Tel/ Electricity Bill/ Lease agreement/ Trade license /Passport /Sales Tax certificate • Proof of Age: Passport, PAN card, Voter identity card • Financial Documents
Factors mainly considered are the age, income, credit scoring, outstanding liabilities, residence location, company an individual is working for and so on.
It is the security that is pledged with a bank to avail loan, the more the collateral value is, the benefits are more. This gives a security for the banks to offer bigger amount of loans as the risk is low. Not every bank needs collateral for approving loan.
It is advisable to not apply for too many loans, limit yourself according to the necessity. Credit score will go down as and when you apply for more and more loan.
The credit score should be minimum 750+ to be eligible for a business loan at Capital First.
Anything between from min 16 (percentage) to 22 (percentage) is considered as a good deal.
Tenure - minimum of 24 months to maximum of 36 months. While most of the banks have the minimum limit as 12 months, Capital First has minimum limit as 24 months
Huge purchases and outstanding debts will impact the loan approval, thus avoid the same. The rate of interest will be high for low credit rating.
Irrespective of what type of business it is, the minimum operation period is of two years or more. The longer a business has been in existence the more is the probability of getting a loan.
Loan amount x Interest/12) x [(1+ interest rate/12)^loan tenure in number of months] / ([(1+ interest rate/12) ^ loan tenure in number of months]-1
It offers convenience, accuracy, and speedy calculation, specific details of each type of loan and Amortization tables etc.
Tenure - minimum of 12 months to maximum of 48 months.
Anything between from min 13 (percentage) to 20 (percentage) is considered as a good deal.
Anything between from min 13 (percentage) to 20 (percentage) is considered as a good deal.
The credit score should be minimum 750+ to be eligible for a business loan at Citibank.
If all documents are submitted on time and if all eligibility criteria are met, loan can be availed within 6-8 days.
It is advisable to not apply for too many loans, limit yourself according to the necessity. Credit score will go down as and when you apply for more and more loan.
Outstanding debts and huge purchases will definitely impact loan approval, thus try to avoid it. The interest rate high if the credit rating is low for the individual.
Make use of the option in Finance Buddha by 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.
The revenue pattern, years of operation, credit worthiness is evaluated for an existing business before considering for loan processing. Company credit score is associated with tax ID number as well as the incorporated name.
Factors mainly considered are the age, income, credit scoring, outstanding liabilities, residence location, company an individual is working for and so on.
Irrespective of the type of business, the minimum prior operation tenure is two years or more. Longer the business is in existence, greater is the benefit.
It is the security that is pledged with a bank to avail loan, the more the collateral value is, the benefits are more. This gives a security for the banks to offer bigger amount of loans the risk is low.
There are applications who have received top up loan amount on the same day. As all documents are readily available, they will simple recheck the CIBIL score and business performance and will approve the loan amount.
From INR 50,000 to INR 4,000,000 can be availed depending on the income of the applicant.
It should be repaid through EMIs- Equated Monthly Installments; it can either be through standing instructions and post-dated cheque.
There is no need for collateral or security for availing a business loan.
It can be between 12 months to 36 months depending on the applicant’s requirement.
Yes, the option is available however only after 1 year.
Loan will be approved by an average 3 days’ time if all documents are accurate and if the applicant meets the eligibility criteria.
The below documents are required: Income proof, bank statement and one photograph KYC-PAN, address & ID proof
No, this option is not available in HDFC bank for business loan.
The applicant should be between 21 years to 60 years to apply for a business loan.
Fortunately, the answer is no, there is no one-time fee requirement.
There are mainly 2 types of business loan- working capital loan and business loan.
The lowest EMI amount is INR 2,035 for every INR 100,000.
Interest rate for business loan at ICICI starts from 16.85%, it totally depends on the applicant’s eligibility criteria.
Business loan from ICICI bank can be repaid by 84 months. This is one of the best banks that offer longest business loan tenure.
Prepayment is allowed with charges of 2% of the outstanding amount; however this is possible only after 6 EMI payments.
Yes, the option is available however there are some eligibility criteria to be met.
No, this option is not available currently at ICICI bank for business loan.
Yes, the option is available however only after 6 months.
Loan will be approved by an average 4 days’ time if all documents are accurate and if the applicant meets the eligibility criteria.
Interest Rate 16.85% Lowest EMI INR 2,035 for every INR 100,000 Tenure From 12 months to 84 months Loan Amount Max INR 10,000,000 Part Prepayment, Charges Not allowed Early Foreclosure, Charges Allowed after 6 EMI's, 2% in case of Balance Transfer
Complete loan application form with one passport size photograph Valid Proof of Applicant's Identity: Passport, Photo PAN card, Voter’s identity card , Driving license and MAPIN card Proof of Residence: Ration card Tel/ Lease agreement/ Electricity Bill/ Passport/Trade license /Sales Tax certificate Proof of Age: Passport, Photo PAN card, Voter’s identity card Financial Documents
Through Finance Buddha you can simply apply for the loan and ICICI bank will contact you directly to take the proposal to the next level.
Yes, you can avail tax benefits if you have a business loan from ICICI bank or from any other authorized banks.
No, Finance Buddha is an absolutely free platform for those who are looking to get all information about loans and even for applying for the same.
Yes, they will get notified and accordingly to their turn-around time limit an official will contact you to take the request to the next level. Some banks have turnaround time as 48 hours while some need at least 5 business days.
Through Finance Buddha you can simply apply for the loan and IndusInd bank will contact you directly to take the proposal to the next level.
Yes, you can avail tax benefits if you have a business loan from IndusInd bank or from any other authorized banks.
Yes, they will get notified and accordingly to their turn-around time limit an official will contact you to take the request to the next level. Some banks have turnaround time as 48 hours while some need at least 5 business days.
1. Complete loan application form with one passport size photograph 2. Valid Proof of Applicant's Identity: Passport, Photo PAN card, Voter’s identity card , Driving license and MAPIN card 3. Proof of Residence: Ration card Tel/ Lease agreement/ Electricity Bill/ Passport/Trade license /Sales Tax certificate 4. Proof of Age: Passport, Photo PAN card, Voter’s identity card 5. Financial Documents
Loan will be approved by an average 3.5 days’ time if all documents are accurate and if the applicant meets the eligibility criteria.
Yes, this option is available currently at IndusInd bank for business loan.
The lowest EMI amount is INR 2,327 for every INR 100,000.
Business loan from IndusInd bank can be repaid by 60 months.
Yes, the option is available however there are some eligibility criteria to be met.
The level of attention and offered given to women entrepreneurs are exceptionally great as compared to what other banks offer.
The loan amount can be used for expansion of existing business, for crafting a whole new business from scratch. It can also be used for the working capital purpose and more.
Below are the important few criteria to be eligible for a business loan from Kotak Mahindra Bank Age at least 23 and less than 55 Self Employed - 5 years in business with 3 Years IT Returns Net Profit should be greater than INR 250,000 p.a.
Keep all original documents handy like revenue slips, bank statements, tax payment receipts and other financial documents.
Ensure to make regular payment on outstanding debts and beware of the penalties.
Don’t apply for too many loans, limit it as per the necessity- the Credit scoring will reduce if you have more debts.
Huge purchases and outstanding debts will impact the loan approval, thus avoid the same. The rate of interest will be high for low credit rating individuals.
Make use of the option in Finance Buddha by giving few basic details like name, contact details, loan amount, type of business and income will give the list of NBFCs and 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.
Step 1: Complete all paper work well in advance Step 2: Draw an approximation of how much cash is required right now and for future Step 3: Hunt for expert’s assistance Step 4: Check what are the fee, rate of interest and other charges for each bank Step 5: Decide whether you need a long-term business partner or if the need is just quick capital for investment Step 6: Ask the right questions without hesitation Is the performance of business crucial for business loan? For an existing business, the revenue pattern, the years of operation, credit worthiness is evaluated prior to considering for processing. Independent credit score for a company that is associated with the tax ID number and legally incorporated name is considered.
Even if there is no existing business, having a great business plan with execution blue-print will be legally measured and scrutinized by banks before offering a business loan.
Yes, this special benefit is available and the features for the same are: • Fixed interest rate starting as low as 11.5% to 19.65% • Upto 2% processing charges • Maximum limit for business loan amount is 15 lakhs • Tenure range is 1-5 years • Conditional pre-closure - after 1 year • Average approval time is 4.4 days • Services are offered at door step • Applicant can make use of balance transfer and top-up loan options • Age at least 21 and less than 55 • Income should be more than Rs. 25,000 per month
The level of attention and offered given to women entrepreneurs are exceptionally great as compared to what other banks offer.
• Complete loan application form with one passport size photograph • Valid Proof of Applicant's Identity: Passport, PAN card, Voter identity card , Driving license • Proof of Residence: Ration card Tel/ Electricity Bill/ Lease agreement/ Trade license /Passport /Sales Tax certificate • Proof of Age: Passport, PAN card, Voter identity card • Financial Documents
Irrespective of what type of business it is, the minimum operation period is of two years or more. The longer a business has been in existence the more is the probability of getting a loan.
It is the security that is pledged with a bank to avail loan, the more the collateral value is, the benefits are more. This gives a security for the banks to offer bigger amount of loan as the risk is low.
All applicants who have good credit score can walk into any bank to get a business loan. The better your score is, you can avail more benefits and the interest rate will also depend on the same. Minimum score should be 750+.
It is a one-time payment made to the bank to process the loan amount. It’s the extra cost incurred for the service charges. This is not refundable and interest will not be provided on the same. Irrespective what loan you are looking for, this charge is mandatory and has to be paid at the first stages.
If ever you wish to pre-close your loan amount prior to its tenure, this can be done so by paying the additional prepayment charges. This amount is calculated on the outstanding loan balance by the bank to check the service charges and other related charges.
Flexi cash is basically designed for SMEs. It usually gives you the free cash deposit limits ranging from INR 4.5 million to INR 20 million per quarter.
Term loan is basically designed for the manufacturers, retail/ wholesale traders and for the majority sections of the service providers.
Here is the list of the entities that can approach the bank for the above said loan- • If you are a professional and self-employed individual. • Sole proprietors and proprietorship firms are most welcome. • Companies which are private limited. • For public limited companies there is a list of some selected companies and that too with the promoter holding greater than or equal to a 51 percent holding.
It basically depends on the amount of the cash flows with the customer and also the purpose of the term loan is of vital importance. Usually it varies between 5 to 15 years.
Term loan is basically of different kinds and its list includes- • Term loan for the acquisition of property. • Business expansion loan. • Purchase of fixed assets.
The minimum range of turnover requirement is INR 10 million and the maximum turnover requirement is INR 1,850 million.
It basically subject to the conditions but usually the minimum amount is Rs. 30 lakhs and the maximum amount is INR 750 million.
The simple answer to this common question is that it depends on case to case and all the other requirements will be explained to you by the sales officer.
Here is the list of the documents one need to submit before getting the Term Loan: - • You must have an Audited Financials of the previous 3 years. • Bank statement of the last six months. • Identity proof and address proof is compulsory. • Other necessary documents include the net worth statement and tax returns of the promoters/borrowers and for the guarantors. • Lastly you should carry the proof of the invoice on the purchase of the assets.
The minimum turnover requirement is INR 4 million and the maximum turnover requirement is INR 300 million for the business loan.
Business Instalment Loan basically targets the entities that includes proprietors, partnership firms, private limited companies and the professionals.
One of the biggest advantages of this loan is that no collateral or additional security is required.
Lease rental discounting basically made for fulfilling the financial needs of the following entities: - • Professionals that includes sections of the societies like doctors, architectures, chartered accountants, business consultants. • Companies like public limited and private limited companies. • All the partnership firms. • And lastly for the sole proprietors and proprietorship firms.
Rent receipts that are payable by the tenant directly and for a collateral security the underlying property that can be commercial or your quasi commercial property will work.
If you are looking for the lease rental discounting loan giving no plot or self-construction or under construction properties will be allowed.
Business Loan eligibility depends on the following factors: Credit score of the loan applicant/co-applicant The last two years financials of the borrowing entity Information about the Debt Service Coverage Ratio: This information tells the lender whether the borrower will be able to service the EMI for the current loan.
Some banks have a lock-in-period of six months to one year for the business loan. While some others allow you to pre-close the loan even after the first EMI has been paid. Some banks may have a rule that a borrower can use his own funds to pre-close the loan and not use the balance transfer facility of another bank. Additionally, some banks allow pre-closure at no cost while some others charge an upfront fee of 2-5% of the pre-closed amount. Clarifications on this are to be sought from our business loan advisor during the processing of your application.
Some banks may allow part payment while some others may have restrictions on how many times in a year you can part pay and also the minimum and maximum amounts you can part pay. Again, a clarification is to be sought from our loan advisor during the time of loan processing.
In normal situations, the minimum loan amount offered is INR 100,000. This may go up to a maximum of INR 40,00,000. Higher loan amounts may be considered after an in-depth discussion between the borrower and the bank willing to lend.
Finance Buddha will work with the concerned bank and get you the loan within 5-7 working days of your submitting the completed documents.
Borrower’s PAN card, address proof, last two years financial statements including profit and loss account and balance sheet, last six months bank statements, VAT/Service tax returns, partnership deed/MOA, existing loans repayment track record, partner/director’s PAN card, KYC, own house proof, ITRs, etc. Additional documents may be required on a case to case basis.
All business loans are repaid through EMIs or equated monthly installments from the borrowers bank account. The borrower or customer is required to either give PDCs or sign an ECS mandate in favor of the bank disbursing the loan.
The bank will levy certain ECS bounce charges or penalties. Additionally, that will also get reported in your credit report. Depending upon the severity and the regularity of the miss, it may have a serious impact on your future credit possibilities like in obtaining a home loan, car loan, etc. Additionally, banks may also take legal action against the borrower.
The rate of interest varies from 16% to 23%. The processing fee of up to 2.5% of the loan amount is levied. Additionally, some banks may also insist on insurance cover.
A business loan is a loan given by banks or NBFCs for a period of one to three years. This loan is given without any collateral, hypothecation of assets or guarantor. Proprietorship companies, partnership businesses or private limited and public limited companies are eligible for this kind of loans. This capital may be used for working capital, meeting short-term cash-flow requirements, purchasing plant and machinery, etc.

Business Loan Frequently Asked Questions ReviewsView All

Raji M

5 / 5

Bangalore is a city which is full of options for a loan. But I decided to go with finance Buddha for my business loan in Bangalore. I decided this because I am already having my personal loan from here. The service for both my loans was very good. I will recommend other people also for this product if they are looking for a business loan.
Sima Patel

5 / 5

I got my business loan in Ahmedabad through Finance Buddha. I was not aware that Finance Buddha has started its services here also. But when I went through the website I got to know this. The same moment I applied for the loan, which was approved through Bajaj Finance.
Sanjay M.

5 / 5

I was a housewife and wanted to start my own kitchen for food delivery. Finance Buddha helped me to get a business loan from my preferred bank. The rate of interest is affordable and now i have started my kitchen.
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