Business loan

A loan specifically intended for business. As with all loans, business loan involves creation of debt that has to be repaid with interest. Business loan is an unsecured loan offered to self-employed individuals including proprietors, partnership, private and public limited companies on the basis of turnover and ITR filed for last three years.

Business loan is fund provided to business by a bank, individual(s), or an organization usually to be repaid by a certain date with certain amount of interest. The amount of a loan, interest rate, repayment date, qualification of the loan recipient to merit the loan, credit analysis and the number of lenders used to achieve the desired loan amount are all variable.

Fresh Business Loan

The growth and sustainability of a business depends on the continuous inflow of funds. The funds might be required to expand the business or purchasing equipment. Businessman need the funds to buy some equipment, working capital gap, payment to creditors, pay off business dues, pay employee’s salary etc. Businessmen can’t put the funds in line from their personal savings. Thus, they opt for business loans. The business loan works as the perfect financial aid for such situations. Taking a business loan is always a safe and easy way to tackle your business-related financial needs. You can also apply for a business loan if you want to start a second line of new business. The terms and conditions to avail such a loan are different than the loan taken for already running business. Also, each business is different in various aspects thus it requires different documents and is applied to different criteria. That’s why banks and NBFCs offer customized business loan plans as per the requirement of applicant/s. These plans are applicant/s centric and made with keeping financial alternatives in lure. The funds can be borrowed in the form of a loan from banks and other financial institutions. Business Loans are typically unsecured in nature which means no collateral or security is required to borrow a loan. Business Loan is a debt provided to the company or the self-employed professionals or business owners that are to be repaid along with the principal amount. The rate of interest is usually pre-determined by the lending institutions. A Business Loan in India is offered at competitive interest rates, with a low processing fee, and without any security or collateral. Several leading banks and NBFCs including HDFC Bank, ICICI Bank, Capital First, Citibank, Fullerton India, Tata Capital, and so forth are offering business loans.

How business loan is helpful?

Businessmen or entrepreneurs take business loan to meet with their various business-related needs. We have listed a few of them below:

Business loan for working capital

Even in an on-going business, businessmen require ample amount of funds to sustain and fund for their daily operations. These loans help them to be sustainable soon and it can be paid off once the business starts to grow. This type of loan comes handy in a situation when the business earnings are not adequate.

Business loan for business expansion

Every entrepreneur wants his or her business to flourish beyond the boundaries of its local position. This though comes to their mind when business starts to grow in its initial location and there is a positive flow of profit. Businessmen understand the need and urge to expand their own product i.e. the very own business. But expanding the business beyond local capacities is not easy, financially speaking. It surely needs a strong monetary backing to meet with the needs of expanding the business. Whether its location, equipment, new recruitments or paying for new communication channel, businessmen need a bucket full of finance. Thus, they opt for business expansion loan. By taking this loan, businessmen make sure that their respective business touches new heights of success.

Business loan for developing infrastructure

Having a well-built exquisite infrastructure is one of the key points of a business. Your clients many times judge you from the infrastructure you work within. Also, it is easier to many businesses to have a well sorted customized infrastructure for smooth day to day affairs. Obviously having any kind of infrastructure, small or large, does not come in cheap. Thus, businessmen opt for this type of loan.

Business loan for buying machinery or equipment

Almost all types of businesses need specific machinery or equipment for smooth functioning. Many times, these equipment are higher in price. Thus, businessmen opt for this type of loan to buy such equipment and pay it off with profits which will come from the use of these equipment or by putting them out on lease later.

Business loans for self-employed professionals

This is a type of unsecured loan which is given to self-employed professionals. The loan amount varies from Rs. 25,000 to Rs. 75,00,000. The amount depends on the applicant’s financial status and history. Self-employed professionals include CA, CS, doctor, engineer, architect, trader, commission agent, contractor etc.

Business loan to finance a project

This type of loan is given for a long-term specific business project. The company has to present a project assessment report on which the loan is granted.

Categories of Business Loan

Some types of Business Loans are explained below:

Term Loans:
Term Loans could be used for business expansion or capital infusion requirement of an organization. Generally, a term loan is the loan offered for the acquisition of long-term fixed assets including land or building, machinery, and other business needs.  The interest rate can be either fixed or floating and are usually have a fixed repayment schedule.

Working Capital Loans:
These types of loans are offered to meet the daily operating expenses of the business. These loans can be further classified as secured and unsecured loans.

Overdrafts:

An overdraft means overdrawing from a current account. In simpler words, an account holder takes out more money that has been deposited in the account. An agreed rate of interest will be charged if the overdrawn amount is within the limits of a preceding agreement.

Bill discounting:

This process gets you instant cash back on your large purchases and you get discount on the credit sales. All you need to do is to submit the important documents which validate your transactions like invoices, transportation receipts, lading bills etc.

Letter of credit:

A letter of credit is issued by the buyer’s bank which declares that a seller will receive the payment in full when all the terms and conditions regarding sale and delivery have been completed. This situation generally arises in international business finance where seller and buyer are unknown to each other, therefore the business transactions is done on the basis of bank’s credit worthiness.

The important documents which a seller has to present in order to get the payment consist:

• Commercial documents such as invoice and lading bills
• Transportation documents
• Insurance certificate
• Official documents such as origin certificate, inspection certificate, commercial and legal documents

Special schemes for women entrepreneurs:

Nowadays, banks are giving attractive business loan scheme for women entrepreneurs. These lending schemes are exclusively for women and it gives them relief in terms of interest rates and collateral. Some of banks also have special cells for women entrepreneurs where they provide them business consulting, training and counselling along with avenues for the marketing and showcasing of their products. They also show them the realistic view of their business by giving references of the similar businesses.

Women entrepreneurs whose ownership is less than 50 percent in the company are not allowed availing the benefits of the women’s special schemes.

Mudra Yojana:

This is a special a government business loan scheme for small and medium businesses. Though the funding is provided through the banking institution, it is the government of India who provides the required cash to the bank. Mudra loan scheme is specifically designed to make government loans for small businesses available to all over India.

 Features of Business Loan

Business Loan is a great option when it comes to expanding your existing Business or starting something new of your own. There are some salient features of Business Loan which you should know before applying for one, which includes the following –

Collateral Free Loan

Business Loans are unsecured loans which mean that no security or collateral is required to apply for a Business Loan. One does not need to provide any asset like a car or a house to avail a Business Loan. The financial lenders review the Loan Applicant’s credit history, age, location, income details of the past few years and only then the loans are offered.

Fixed Interest Rate

Business loan interest rates are fixed, which means the Interest Rate will not change for the entire Loan Tenure. The Interest Rate of Business Loan starts from 14.99% onwards.

Flexible Repayment tenure

The Loan Applicants can get flexible repayment tenure up to 5 years, making it more preferable over other Loans.

Loan Amount

The loan amount that one can avail in business loan can be up to Rs 50 Lakh. It mostly depends on the financial credibility of the borrower before offering the business loan.

Minimal Paper work and Fast Processing

Since loans can be easily applied online, it requires minimal paperwork. Only the necessary documents are required to apply for a business loan. Once the loan application is approved, the processing of the loan amount is followed by the disbursal.

Personal Loan Eligibility & Standards

Documents required for Business Loan

Given below is the comprehensive list of all the documents require to process the personal loan. All the alternate of documents are provided here below to choose from.  Documents marked in bold red letters are mandatory.

Our association for Business loan

As India’s one of the fastest financial services distributor Proloans has a large portfolio of partner banks and financial institutions including: