What is a Business Loan?
If you own any business, running it on the desired track is not an easy task. One can face difficulties in maintaining the right pace of the business. A successful company requires sufficient manpower, technology, good infrastructure, and financial resources. Capital is always needed to run the business on the desired track. You can avail a loan for your business from Banks or NBFCs. Business Loan is a scheme that provides you with the required funds to cater to all the needs of your company. Business Loan can be used for multiple business purposes like buying new machinery, new technology, making payments and many more. You can get the required finance by availing this scheme. It is unsecured Business Loan. There is no need of any collateral. If you are having a small scale industry, you can also avail this SME (Small Medium Enterprises) Loan.
Purpose of a Small Business Loan
Businesses can raise funds by inviting shares and debentures or simply borrowing from banks and other lending institutions and the purpose of doing so could be different:
- Expansion of an existing business.
- For improvement of office premises, constructing a new building.
- Designing a new concept or product in new business.
- Starting a new business.
Types of Business Loans
Secured Business Loans: In secured business loan, the borrower pledges his valuable property as security to the lender. It is called as secured loan because the property pledged by the consumer is kept secured to the lender. When the borrower fails to make repayments on time, bank can get possession of the collateral provided. As a result, the creditor ca recover easily from the risk occurred by selling property for any purpose.
Unsecured Business Loans: In an unsecured loan, there is not any hard requirement of any type of collateral. It is hard to get, but cheaper at the same time. Creditors check the credit history before granting the business loan. Creditors evaluate the repayment ability of the business.
Professional Loans: Professional Loans are given to Self Employed Professionals like Doctor, Engineer, Chartered Accountant, Secretary and any more. For Doctors, there is a specially designed scheme called Doctor’s Loan. These loans are unsecured by nature, i.e, you do not need to pledge any valuable property to the lender and also known as Personal Loan for Self Employed. These loans are not given to manufacturing and trading units. The loan amount varies from 25,000 to Rs. 25 lacs.
Trade Loans: Trade loans are provided to traders/ businessmen, so as to help them either open a new business or operate/expand an existing one. The amount of loan varies between Rs. 25000 to Rs. 100 lakh, considering the age of the customer, his financial standing, his repayment capacity, tenure of the loan, etc.
Eligibility For a Business Loan
- Minimum age of the applicant: 21 years
- Maximum age of the applicant: 65 years
- Minimum Turnover: 15 lakhs(varies according to the cities)
- Years in the Business: Minimum 3 Years
- ITR Filed: Minimum of 2 years
- Minimum Loan Amount: Rs. 25,000
- Maximum Loan Amount: Rs. 50 lakh.
Business Loan Interest Rates: Interest Rates amount vary according to the banks or NBFCs. It may also depend upon your business, loan amount and your credit history. Check Interest Rates for Business Loan here.
Documents Required For Business Loans
Documents required for availing a Business Loan are:
- ID Proof ( Passport / Voters ID card / Driving License) Any one of these
- Residence Proof ( Ration card / Telephone Bill / Electricity Bill / Passport ) Any one of these
- Proof of continuity of business ( Trade License/ Establishment / Sales tax Certificate)
- Latest ITR of 2 years with the balance sheet
- Latest 1-year Account Statement
- 2 passport size photographs
Take benefit of our EMI calculator to check the affordability of your Business Loan EMI
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Business Loans COVID 19
The entire world is grappling with the issue of COVID 19. As most businesses get impacted by the Corona Virus and undergo a direct impact on their financial stability and existence, most of the lending institutions are becoming stringent on lending to small and medium-sized business.
The product programs of all Banks and NBFCs have 2 standard options for businesses to get money. The business needs to either fit into a standard financial eligibility program or in case of the entity not being able to have adequate financial strength on paper, the lending institutions consider and run surrogate programs. These surrogate programs consider various other documents to establish the strength of the business. These programs include Banking Surrogate and Existing Loan Surrogate.
With COVID 19 impacting most businesses, the lending institutions have stopped lending under the Surrogate programs and also made the criteria for standard programs more stringent. One of the ways to get Business Loan under COVID 19 is to look at other products of these Banks.
During this time of COVID 19, the most affordable and one of the surest ways is to look at leveraging your Gold Jewellery and getting a Gold Loan @ 1% pm. To read more and apply for a Gold Loan.
Avail the Doorstep Services of Dialabank and get the Best Business Loan on Affordable Interest Rates. You can apply online or can call us on 9878981166. Get Experts Advice and find the best offer.