Business Loan

Business loans are a type of credit facility provided by banks, NBFCs, and other financial institutions to satisfy the funding needs of individuals, MSMEs, and other business entities. Startups, entrepreneurs, retailers, traders, manufacturers, self-employed professionals (CAs/Doctors), existing firms, and numerous other business entities can all apply for a business loan.

Secured loans and unsecured loans are the two main categories of business loans. Secured loans are those in which the borrower must deposit security or collateral with the lender in order to receive funding. Unsecured loans, on the other hand, do not need the submission of any kind of security or collateral to the bank, NBFC, or other financial institution.

A variety of secured and unsecured business loans are available from banks and non-bank financial institutions (NBFCs), including term loans (short-, medium-, and long-term), working capital loans, cash credits, overdrafts, letters of credit, bill and invoice discounts, equipment financing, machinery loans, point-of-sale (POS) loans/merchant cash advances, fleet financing, loans under bank guarantees (BG), and loans under government programmes like Mudra Loans (PMMY), SIDBI, Depending on the needs of the firm, financial institutions also provide startup loans, small business loans, and microloans with loan amounts of up to Rs. 10 lakh or more.

Top Banks'/NBFCs' Business Loan Interest Rates for January 2023

The business loan interest rates provided by financial institutions on our one online platform vary from lender to lender and are further based on the applicant's profile, creditworthiness, eligibility, and business requirements. The table below shows a comparison of the interest rates for business loans provided by top banks and NBFCs.

Eligibility Criteria

• Business tenure: at least one year.
• Depending on the lender, the minimum annual turnover must be different.
• Credit Score: 750 or above
• Candidates with no history of financial institution loan defaults

Documents Required to apply for Business Loan

The following records must be provided when making a loan application for a business:

• properly completed application form and two passport-sized photos
• PAN cards, passports, Aadhar cards, driver's licences, voter ID cards, and utility bills (water/electricity bills) are examples of the applicant's KYC documents.
• Last 1 years’ bank statement
• Copy of Non-Collateral Overdraft, if any
• Copy of Business Incorporation
• Any other document required by the lender

Eligible Entities

• People, companies, business owners, entrepreneurs, independent contractors (CAs, CSs, doctors, and architects), startups, and MSMEs
• Limited Liability Partnerships (LLPs), Sole Proprietorships, Partnership Firms, Private and Public Limited Companies, and Large Enterprises operating only in the Manufacturing, Trading, or Services Sectors
• NGOs, cooperative societies, trusts, and so forth.

Fees & Charges

Any form of business loan fees and charges will vary from lender to lender and case to case. The fees and charges are often determined by the applicant's profile, creditworthiness, business kind, requested loan amount, provided interest rate, repayment period, and a number of other considerations.

How to Apply Online for a Business Loan

Apply for a business loan by completing the 4 easy steps shown below:

• Step 1: Check the box to indicate that you agree to the terms and conditions after filling out the form's compulsory fields. To access the best offers, click.
• Step 2: Along with your registered mobile number and email address, you will also need to provide information about your firm and basic personal characteristics.
• Step 3: The bank representative will get in touch with you once you've submitted all the information to start the loan application process.
• Step 4: The loan amount will be disbursed in the designated number of working days after the bank has examined and accepted your loan application and supporting papers.

Types of Business Loans in India

Term Loan

There are many other types of term loans available, including short-term loans, long-term loans, and other small company loans. The loan amount provided under a term loan is determined by the applicant's profile and business needs, and it can be repaid in EMIs over a period of 12 to 5 years. Unsecured business loans and secured business loans are the two categories under which term loans fall. Unsecured business loans are not subject to the requirement of collateral, in contrast to secured loans.

Working Capital Loan

Working capital loans are used to cover ongoing business expenses or to control cash flow. Other uses for the working capital loan include business expansion, the purchase of machinery or equipment, the purchase of commodities or raw materials, the payment of salaries or rent, the expansion of inventories, and many more. Most lenders typically give a payback period of up to 12 months, although they may extend it at their own discretion and in accordance with business needs.

Bill/Invoice Discounting

Banks and NBFCs provide the financial instrument of invoice discounting. For the seller of products on credit, bill discounting is a source of working capital financing. It is a discount obtained from a buyer by a financial institution. The buyer can choose to purchase items from the seller by paying with a letter of credit. Bills of Exchange are bills that fall under bill discounting.

Letter of Credit (LC)

Banks and NBFCs provide the financial instrument of invoice discounting. For the seller of products on credit, bill discounting is a source of working capital financing. It is a discount obtained from a buyer by a financial institution. The buyer can choose to purchase items from the seller by paying with a letter of credit. Bills of Exchange are bills that fall under bill discounting.

Point-of-Sale (POS) Loan / Merchant Cash Advance

Point-of-Sale A loan is a form of credit facility in which retailers provide funding to customers at the time of a transaction. Such money is available to retailers, MSMEs, business owners, and entrepreneurs. loans secured via POS systems to fund the establishment of new businesses or the management of existing ones. The amount of a POS Loan, also known as a Merchant Cash Advance, is determined by the volume of sales made by POS terminals.

Overdraft (OD)

A current or savings account overdraft occurs when money is taken out of the account even while it has a negative balance or even one. If the amount overdrawn falls within the parameters of a prior agreement, interest will be charged at a predetermined rate. Only the portion of the total withdrawal or sanctioned limit that has actually been used is subject to interest charges.