Before applying for the loan, prepare a business plan, know your credit score, decide the loan amount, do some market research on available business loan options, and keep the documents ready.
Proof of address & photo identity proof of the promoters, business proof, income proof, partnership deed for partnership firm, articles of association, memorandum of association, board resolution, PAN card, etc.
Applicants should be aged between 21 to 65 years, having business vintage of a minimum of 1-2 years. The minimum business turnover and a minimum annual turnover as per the ITR will be required. The business should be profit-making for at least the last 1 year.
Business Type: Most lenders provide loans to various types of businesses, including sole proprietorships, partnerships, limited liability companies (LLCs), corporations, and more.
Credit Score: A good credit score is often required to qualify for a business loan. Lenders use your credit history to assess your ability to repay the loan.
Business Age: Some lenders require a minimum operational history for your business, usually ranging from a few months to a year or more.
Annual Revenue: Lenders may have a minimum annual revenue requirement to ensure your business has a stable income.
Collateral: Secured loans might require assets as collateral to secure the loan. Collateral can be real estate, equipment, inventory, or other valuable assets.
Cash Flow: Lenders often evaluate your business’s cash flow to determine your ability to repay the loan.
Age Criteria: Min. 21 years at the time of loan application & Max. 65 years at the time of loan maturity.
Eligible Entities: Individuals, MSMEs, Sole Proprietorships, Partnership Firms, Public and Private Limited Companies, Limited Liability Partnerships, retailers, traders, manufacturers, and other non-farm income-generating business entities engaged only in the services, trading, and manufacturing sectors
Business Vintage: Min. 1 year or above
Business experience: Min. 1 year, business location to remain same
Annual Turnover: Shall be defined by the Bank/NBFC
Credit Score: 700 or above (Preferred by most private and public sector banks)
Nationality: Indian citizens
Additional Criteria: Applicants must own either a residence, office, shop, or Godown.
| Particulars | Charges |
|---|---|
| Loan Processing Fees | 1.5% to 5% of Loan Amount |
| Loan Cancellation | Usually 0 to 5% of Loan Amount |
| Stamp Duty Charges | 60/- to 600/- |
| Legal Fees | Nil |
| Penal Charges | Nil |
| EMI / Cheque Bonus | Approx 499/- to 599/- |
Other fees and charges that lenders may levy on your personal loan include documentation charges, verification charges, duplicate statement charges, NOC certificate charges and swap.
A business loan is a type of financing provided to businesses for various purposes, such as starting a new business, expanding operations, purchasing equipment, or managing cash flow. The amount one can borrow depends on several factors, including the lender’s policies, the borrower’s creditworthiness, the purpose of the loan, and the financial health of the business. Typically, business loans can range from a few thousands to several Lakhs. Lenders assess the borrower’s ability to repay the loan based on factors such as credit score, business revenue, and profitability.
Business loans are available to various entities, including sole proprietorships, partnerships, LLCs, corporations, non-profit organizations, and startups. Eligibility is typically based on factors like the business’s creditworthiness, revenue, profitability, and the borrower’s personal credit history. Each lender may have specific criteria, so it’s advisable to check with them for exact requirements.
To get a business loan, you typically need to provide a business plan, demonstrate a good personal and business credit score, submit financial statements and tax returns for your business, and possibly offer collateral. Additional requirements may include legal documents, bank statements, and personal identification. Requirements can vary, so it’s best to check with the lender for the specific documentation needed for your loan application.
Udyam Registration, or MSME Registration, is a special card granted to small and medium-sized businesses by the government of India. This card has a unique number and a certificate stating that the company is a micro, small, or medium enterprise. This Udyam registration helps MSMEs secure loans with lower interest rates, reduced collateral requirements, and faster processing times, making it easier for small businesses to grow and thrive.
By registering under Udyam, businesses can also gain access to government subsidies, tax benefits, and other financial support tailored to their needs. This initiative is part of the government’s broader effort to promote entrepreneurship and support the growth of MSMEs in India.
Minimum Cibil score required for acquiring a business loan is generally 650+ but it also depends on various lenders.
To qualify for an instant business loan, you typically need a good credit score, stable revenue, and a low debt-to-income ratio. Lenders may also require your business to have been operational for a certain period. Meeting these criteria increases your chances of qualifying for an instant business loan, which can provide quick access to funds for your business needs.
Business loan is an unsecured loan in which one doesnt need any collateral to secure a loan from any lender.
The Government of India has initiated several loan schemes to support various sectors and promote entrepreneurship and economic development. Some key loan schemes include:
1) Pradhan Mantri Mudra Yojana (PMMY)
2) Stand-Up India Scheme
3) Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)
4) Startup India Scheme
5) Prime Minister’s Employment Generation Programme (PMEGP)
6) Credit Linked Capital Subsidy Scheme (CLCSS)”
7) National Rural Livelihoods Mission (NRLM)
These schemes are aimed at providing financial support and promoting entrepreneurship across various sectors of the economy.
Qualifying for a business loan typically involves having a good personal and business credit score, a minimum level of business revenue, and a certain amount of time in business. Lenders may also require financial statements, a business plan. Meeting these criteria can improve your chances of qualifying for a business loan, but requirements can vary among lenders.
Yes, it is possible to get a business loan with bad credit, but it can be more challenging. Some alternative lenders specialize in providing loans to businesses with less-than-perfect credit, but they may charge higher interest rates. Offering collateral or having a co-signer with good credit can also increase your chances of approval. Additionally, working on improving your credit score before applying can help you qualify for better loan terms.
You can use a business loan for various purposes, such as expanding your business, purchasing equipment or inventory, hiring staff, launching marketing campaigns, renovating or expanding your premises, managing cash flow, consolidating debt, or investing in new technology. Business loans provide flexibility to address your specific business needs and can help you achieve your growth and expansion goals.
Yes, you can usually pay off a business loan early, but it’s important to check your loan agreement for any prepayment penalties or fees that may apply. Some lenders charge a fee if you pay off the loan before the agreed-upon term, while others allow early repayment without penalties. If you’re considering paying off your business loan early, contact your lender to understand any potential fees and to discuss your options.
