Business Loan In India

Business Loan In India


WHAT IS BUSINESS LOAN?

Business loan is a special kind of loan intended for business purpose. This is most common type of loan taken for all business finance. This type of loan which can be secured and unsecured because the amount available depends on the business’s credit history so one should have clear business history. Most of the startup companies take loans for arising there business in the best possible manner and after that they repay the amount of loan according to the terms and condition which have been applied to them at the time of taking loan.


TYPES OF BUSINESS LOAN
There are many types of loan for business like:-

1. TERM LOAN:- This is the most common type of loan taken for business. This loan may be secured and unsecured in nature for taking this loan the person must have cleared business’s credit history for taking this loan the tenure is fixed if it is unsecured than it will be ranging between 1 to 5 years and if the loan is secured than it will be minimum up to 15 to 20 years. This type of loan is taken generally for capital expenditure purpose.

2. FOR START-UP LOAN:- This is a new kind of business raised generally youth. Now a day’s all want their own business all wants’ to be their own boss so, this kind of loan is for them. So, applicants for such kind of loan may or may not have great credit history due to lack of business vintage. So, when the person is taking this loan he/she should know that there business should be established, and the applicant must submit proof of the business existence and registration.

3. BUSINESS LOAN FOR WOMEN:- nowadays women’s are active in all the fields .so, this kind of loan is for those women who want their own business. So, for this kind of loan is for them there is some financial institutions which have special schemes. Nowadays government is also promoting women’s to establish their own business in small or medium size. This loan can be easily taken and have some discounts on the standard interest rates and also have faster loan process. There are so many advantages for women entrepreneurs like including a flexible loan amount they can take start-up loan and many more.

4. WORKING CAPITAL LOAN: - Working capital loan is also a type of small business loan. This type of loan is mainly taken when there is shortage of cash to operate business it basically helps to generate the day by day balance of money basically this loan is helpful to deal with the shortage of cash during the off-season or to meet the demand during the peak season. This loan is generally taken by the wholesalers, retailers or the traders who are engaged in exports and imports.

5. EQUIPMENT FINANCING: -This is the most secured loan taken by the business man with so many securities, and the interest rate is lower than the charged on them to deposits.

This loan is mainly taken for the costly equipment required in the business or to purchase the machines, out of all business loans this is the most preferred ones.


ELIGIBILITY FOR BUSINESS
  • IDENTITY PROOF:-one should have their passport size photographs, must have business loan application and a copy of driving licenses/passport/Aadhar card/voter ID
  • BUSINESS PROOF: - you must have copy of your ownership papers, establishment /trade license/sale tax certificate and also the copy of partnership agreement.
  • INCOME PROOF:- One should have balance sheet and ITRs and computation of the last two years
  • BANK STATEMENT: - A copy of company’s bank statement is very important of last six months or one year.
  • KYC DOCUMENTS: - One should have copy of his/her PAN card, registration of incorporation, and memorandum and articles and association of documents.

GOOD CREDIT SCORE FOR BUSINESS LOAN:-

We can’t say that it’s good or bad credit score in business loan but if the credit score is falling under 650 to 750 it might be good credit score. However, one can negotiate for better deal, especially when you go towards the 650 marks. If borrowing is not necessary one can consider working on their credit score for a while and after sometimes they can apply for more secure and favourable rate.

HOW TO APPLY FOR A BUSINESS LOAN

Nowadays having your own business is very challenging job in itself, but now it is very easy to take a loan and start your own business.

For applying a business loan you just have to make sure your all the documents are cleared. You just have to go bank and talk to the manager regarding the loan and fill the form online or offline and make sure you take all your documents with you so that can help you as well as the staff can proceed further.

Applying for loan is easy if you have all your documents.
HOW TO AVAIL BUSINESS LOAN AT LOW INTEREST RATE:-

There are some banks which give low interest rate for business loan. Nowadays there is DCB bank which offers low interest rate 9.25% and it may be one of the best banks for business and the processing fee might be up to 2%of the loan amount.

Customized Interest Rates 1.5 to 2% per month
Processing Fees 2-3%
Loan Tenure up to 36 months
Pre-closure Charges Nil**
Eligibility Criteria > ₹ 90,000 turn over for 3 Months
Loan Amount ₹ 50,000 – ₹ 2 crore
Installments Flexible Monthly / Bi-weekly
There are more banks which offer low interest rate like:-
  • HDFC BANK
  • ICICI BANK
  • IDFC BANK
  • IDFC BANK
  • SBI BANK
  • UCO BANK
Business Loan EMI

Different types of business loans can be repaid in different ways. One of the easiest ways to repay a business loan is through Equated Monthly Instalments (EMIs). Your loan is divided into equal fixed sums that are paid on a monthly basis till the full repayment of the loan.
An EMI consists of two parts, the principal loan amount and the accrued interest. Small and medium businesses find it easier to repay business loans with EMIs, as the method allows them to fund expensive assets and expansions without straining their smaller operating budgets.
NBFC loan providers like Lendingkart offer flexible business loan EMIs that can help you repay a business loan two-times faster by opting for bi-weekly repayments. With auto-renewal also on offer by Lendingkart, faster repayments mean quicker access to refinance for the same amount or a larger business loan.

How to Calculate Business Loan EMI?

The Business Loan EMI calculation is done on the basis of a simple formula i.e.
E = P x r x (1+r)n/(1+r)n-1
Here,
‘E’ is the EMI
‘P’ represents the loan amount
‘r’ stands for the interest rate offered on a monthly basis
‘n’ is the duration of the loan

A business loan EMI calculator is a digital version of this formula, that allows you to calculate EMI amount through a web interface. The business loan EMI calculator can help you understand the breakdown of interest and principal loan amount, thus, allowing you to decide the layout of your cash resource planning.

Do’s and don’t’s of Business loans

A business loan can be a great source of capital for the growth of your venture, but, it can also be a path to ruin if you do not plan certain aspects with care. SME loans tend to have a shorter repayment cycle, which means applying for too high a loan amount will inadvertently increase your EMI amount.
If your business runs into a period of low sales or your invoices get delayed, servicing the loan can become difficult and cause a debt pileup. Therefore, there are some things you should consider before applying for a business loan.

Why should you take a business loan?

You can take a business loan to fund your business investments and projects. A business loan can help your business venture to prosper at a faster pace and you can finish stagnant projects immediately.

Do I have to visit the Lendingkart Branch office to avail a loan?

No, the whole process of taking loans is automated online. The document verification too occurs online and thus provides a hassle-free loan application process.

Is there any advantage offered by NBFC for women entrepreneurs

Uniq Loan business loans are free from any bias and prejudice as it is an automated process. The loans provided are in equal and fair terms and conditions.

How can I speed up my loan approval?

Even though our loans are faster than banks, we urge you to provide correct documents and follow the online application process thoroughly so that the loan approval doesn’t have any stoppages.

What is loan foreclosure?

If your business is thriving and sales are up, full repayments at once are possible. You won’t have to keep paying multiple EMIs every month. This is called loan foreclosure or prepayment. However, you have to pay an extra amount called foreclosure charges if you wish to proceed with loan foreclosure.

For more details one can consult the bank.