In today’s era, people prefer to do their own business instead of a job, but most of the people in India belong to a middle-class family and they do not have enough money to start their own business. Business loan to help you start your business. This is a loan with the help of which you can start your new business or run your business smoothly.
In today’s article, we will learn about Business Loans, in which what is Business Loan, how much you can get a Business Loan, the Application Process for a Business Loan, Terms of Business Loans, Required Documents, and the Advantages and Disadvantages of Business Loan I will get to know.
So friends, without taking much of your time, let’s start this today’s article and know in detail what is business loans.
- 1 What is a Business Loan?
- 2 Where Can I Use Business Loans?
- 3 Business Loans Eligibility
- 4 Documents Required for Business Loans
- 5 How Much Business Loan Can I Get?
- 6 How long is the business loan available?
- 7 How to Apply for Offline Business Loan
- 8 How to Apply for Business Loan Online
- 9 Advantages of Business Loans
- 10 Disadvantages of Business Loan
- 11 FAQ: Business Loan
- 12 Conclusion: Business Loans
What is a Business Loan?
Business loans are of both Secured and Unsecured types. In Secured Business Loan, the borrower has to pledge any asset with the lender, and in Unsecured Business Loan, there is no need to pledge any asset.
Overall, the loan taken from a bank or NBFC to start your business or to run your business smoothly is called a business loan.
Where Can I Use Business Loans?
You can use the business loan for the following purposes –
- Starting a business: If you want to start your own business, you can take a business loan for that.
- Buying essential equipment: You can use a business loan to buy essential equipment used in your business.
- You can also take a business loan to run your business smoothly.
- Business loans can also be taken to overcome the financial problems faced by the business.
Business Loans Eligibility
Following are some of the eligibility and conditions for availing of a business loan –
- The citizenship of the applicant should be Indian.
- The age of the applicant should be between 24 years to 70 years.
- The annual turnover of the business should be at least 10 lakhs.
- The business should be at least 2 years old.
- The credit score of the applicant should be 750 or above.
- There should not be any previous loan default record on the applicant.
These are some of the basic terms and conditions, however, apart from the above terms and conditions, different banks and NBFCs may have different terms. Therefore, before applying for a business loan, understand all the terms and conditions very well.
Documents Required for Business Loans
You need the following documents to avail of a business loan –
- loan application form
- KYC Documents (PAN Card, Aadhaar Card)
- Identity Card (PAN Card, Voter ID, Passport, Diet Card)
- Current residence proof (electricity, water, gas, telephone bills, etc.)
- Last 6 months’ bank statement
- business balance sheet
- Copy of ITR filed during last 1 year
- business address certificate
- Passport size photograph
In some banks and NBFCs, apart from these, other documents can also be asked.
How Much Business Loan Can I Get?
A business loan is given on the basis of how big your business is and what is your annual turnover. If your business is not very big, then you can take a business loan ranging from Rs 50 thousand to Rs 1 crore.
But if your business is very big then you can take a business loan up to Rs.40 crores. Overall, banks and NBFCs decide the loan amount on the basis of your business.
Business Loan Interest Rates
Interest rates in business loans are higher than in home loans, most banks and NBFCs provide business loans at interest rates ranging from 11% to 19% per annum. But the interest rates can be higher or lower depending on the risk profile of the customer, loan amount, business, tenure and lender, etc.
How long is the business loan available?
The customer gets time from 1 to 10 years to repay the business loan. Banks or NBFCs decide this time period in most cases according to the loan amount and the risk profile of the customer.
How to get a business loan to start a new business
At present, you can apply for a business loan online by visiting offline banks or financial institutions or even sitting at home without visiting the bank. Here we have told you in detail about the process of taking a business loan.
How to Apply for Offline Business Loan
- To take an offline business loan, first of all, go to the concerned bank branch or financial institution office with your necessary documents.
- Meet the manager there and get all the necessary business loan information.
- After this, take the application form for business loans, and fill in all the information in the form correctly.
- After filling out the form, attach your documents and submit the form.
- Now you have to wait for a few days, the bank will scrutinize your application and if you are found eligible for the business loan, the loan amount is transferred to your bank account within a few days.
How to Apply for Business Loan Online
- To avail online business loan, you need to register in the online portal of the concerned bank or NBFC.
- After this, select Business Loan in the loan option.
- Enter the loan amount you want and click on Next.
- After this, you have to fill in your basic information and check your loan eligibility by uploading documents for KYC.
- Within a few minutes, you will be told whether you are eligible for the loan or not.
- If you are eligible, fill in the information about your business and submit the application.
- By doing this, the loan amount will be transferred to your bank account within 24 to 48 hours.
Advantages of Business Loans
The following are the advantages of business loans –
- If you meet the conditions of the concerned bank and NBFC, then you get a business loan very easily.
- Many banks and NBFCs offer business loans at reasonable interest rates.
- Depending on the size of your business, you can avail a wide range of business loans.
- Business loans are very beneficial for expanding the business.
- Unlike investors, banks and NBFCs will never interfere in running your business. If there is an investor in your business, then he can interfere in your business.
- By taking a business loan, you get all the profit of your business, because, unlike investors, you do not have to share the profit with the lender.
Disadvantages of Business Loan
Let us now take a look at the disadvantages of business loans as well –
- Not all businesses are eligible for business loans.
- In most cases, banks and NBFCs do not give you the amount of money you need, this can make you disappointed.
- Large amount business loans are secured by a valuable asset, in case the applicant is unable to repay the loan within the time limit, the lender can seize the asset.
FAQ: Business Loan
How much can I get a business loan?
Depending on your business, you can get a business loan ranging from 50 thousand to 40 crores.
Where can I get a business loan?
Almost all the big banks of India like SBI, PNB, ICICI, HDFC, Axis, etc provide business loan facilities. Apart from banks, many NBFCs offer business loans.
Who can get a business loan?
Business loans can be availed by every businessman. Provided that the eligibility should be complete from where he is taking the loan. That is, he should fulfill all the conditions of the lender.
Conclusion: Business Loans
Today in this article, we have provided you with complete information about Business Loan, and Business loans. If you also want to start your business or need a loan to run your business smoothly, then you can also apply for a business loan. If you fulfill all the conditions of the concerned bank or NBFC, then you can easily get a business loan at reasonable interest rates.
So friends, that’s it for this blog post, we have full hope that after reading this article all your business loans related doubts would have been cleared, but still, if you have any questions, you can feel free to ask us in the comment box below. In the end, I would request you to share this article with your friends who are in need of a business loan.