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For any start-up as well as an established venture, the requirement of funds remains constant to maintain a stable cashflow. Every business venture seeks business loans to meet such monetary demands that arise throughout the business operations. It is essential to know what financial benefits such ventures reap by opting to apply for easy business loans, be it a small business loan or a bigger one, be it an instant business loan or a time-consuming one.

Broad Categories of a Business Loan

Business loans in India are broadly classified into two types:

Professional Loans: These are extended to self-employed professionals such as doctors, chartered accountants, lawyers, and many more.


Trade Loans: Business ventures having a Sole Proprietorship, Partnership, or Private Limited form of ownership can apply for a business loan.

Benefits of Business Loans for Start-up Businesses and Women

Any loan that is taken to fulfill the financial needs of any individual/firm or an organization to start up a new business or enterprise or expand an established business, providing abundant opportunities for employment at quite a low cost of capital, is an SME Business Loan. Its full form is Small and Medium Enterprise Loan, which helps revolutionize and industrialize small towns, rural areas, and backward places. These kinds of easy business loans, which are generally unsecured loans, when taken by small and medium sectors of business, enhance the domestic production and GDP, thus increasing the rate of exports, imports, and savings, finally contributing to the development and growth of the country at large.

Features of BUSINESS Loans

Anyone looking for a quick finance option to start or renovate a business of his own can apply for a Business Loan, which can also be applied for online. These loans can be customized as per individual needs and is an ideal option for today’s competitive and developing business economy of India. Let us understand the relevant features of these loans:

Value can be up to Rs. 2 crores: These loans start from Rs. 50000 and can go up to a value of Rs. 2 crores. These can be given to micro, small, and medium level business organizations.

Loan granted in 3 days – when the applicant applies for a Business loan online, it is processed the very same day and gets immediate approval depending on the documents and credibility of the applicant. After the appropriate verification, easy business loans are disbursed to the applicant within 3 business days.

Online loan can be applied for – To expedite the approval, investigation, verification, and disbursal, it is highly recommended to apply for a business loan online. This ensures fast-tracking growth and opportunities.

BUSINESS Loans come without collateral: These loans are generally unsecured and do not need any security or collateral. These are completely disbursed on the credibility, goodwill, and paying capacity of the applicant and are easily given out.

Variation in Interest Rates: As opposed to banks and other NBFCs, easy business loans come with a comparatively lower interest rate, which varies from 8.40 % to 24% per annum, depending on a multitude of factors like employment type, amount of Loan required, the collateral is given or not, the profile, goodwill, and creditworthiness of the applicant, his credit score, repayment tenure, and capacity.

Flexibility in the Tenure of Repayment – It has flexible options to repay the loan starting from 1 month and which goes till 36 months. The applicant may also choose a weekly or a bi-monthly option of repaying the loan as per his business and his incoming capital/profits.

No Prepayment Charges – After paying the first EMI, if the applicant has arranged for funds and wants to repay the loan, he will be able to, without paying anything extra or additional charges attached to the repayment.

No Hidden Costs– Besides a processing fee which is about 1-2% of the loan amount, there is no other hidden cost attached with easy business loans and the terms and conditions are quite clear. Business loans can be quite advantageous because of the following factors:

  • These loans are without collateral
  • Easy and convenient to apply for a business loan
  • In case of any default, the dues can be paid off by liquidating the company
  • It is better to approach a bank or an NBFC to take a business loan
  • Banks do not ask for equity dilution
  • Easy Business Loans can be customized as per individual requirements if taken from banks and NBFCs.

Do’s and Don’ts when Applying for Business Loans

There are certain do’s and don’ts that need to be taken into consideration before applying for a Business Loan:

DO’s

  1. To check and maintain the credit score
  2. Sorting out and arranging for proper documentation
  3. Prepare a Business Plan and be ready with all details that may be required
  4. Assess your requirements. Any over or under application of loan amount may result in future losses and increased debt

DON’Ts

  1. One should not apply with various lenders and should only stick to a few lenders.
  2. Existing debts should be immediately repaid, and the burden of debt should be reduced
  3. Should be careful and diligent in choosing the right lender in terms of extra fees, interest rates, documentation, approval, and disbursal procedures. Thorough scrutiny and investigation should be done by the applicant.

How to Apply for an SME Loan

Every bank or NBFC needs some essential and relevant information from the applicant in the application to apply for the loan, which is as follows.

Personal Details

Financial Details

Legal Details

Name of the company

Bank account details

Registration details of the firm

Date of the creation of the firm

Any other ongoing loan details

Registration certificate of the firm

Operating address and the official address of the firm

Other financial services applied for

Copies of sales tax return filing statements

Email address and contact details of the firm

Any security of the facility applied for

Income tax return filings to be attached

Industry code

Details of any parent or subsidiary company attached

In case it’s a pharmaceutical company, then a drug license is required.

PAN Number

Profitability, liquidity, and annual accounting details of the firm

 

GST Number

 

 

 

Eligibility Criteria to Apply for Business Loans:

Who can apply for the Business Loan?

Individual proprietors, self-employed, partnerships, private limited companies, for any business services, trading or manufacturing

Age of the applicant

Minimum age – 21 years and maximum years – 65 years

Minimum Annual Income of the firm

Rs. 1.5 lakhs

Minimum Turnover of the firm

Rs. 40 lakhs

Profit status

For the past 2 years, the firm should have been making profits

Experience of Business/Firm

The firm should be in a stable business for 5 years

Documents required to acquire Professional Loans:

The documents that are required for professional loan approval are:

  • Detailed plan – How will the money be utilized 
  • Plan of how the Loan will be prepaid 
  • Last 2 year’s balance sheet and IT returns
  • Plan of Business expansion 
  • Self-attested photocopy of PAN Card 
  • Personal financial statements of 12 months (bank account statements, CIBIL score, etc.)
  • Collateral or security in case of a higher loan amount
  • Personal Credit References
  • Documents of the established business
  • Certification of incorporation
  • Address proof of the business
  • Ownership document

Thus, business loans offer a plethora of beneficial edges to those who avail of it thereby enabling businesspeople both amateur and experienced or well-established ones to make amendments to their business journey.

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