Business Loan

Business

Loan

Many times businessmen find themselves in need of credit to expand or fund their business for multiple reasons. They need the funds to buy some equipment, working capital gap, payment to creditors, pay off business dues, pay employee’s salaries, to expand, etc. Businessmen can’t put the funds in line from their 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 new business.

The terms and conditions to avail such a loan are different than the loan taken for already running businesses. 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 mind. Banks and NBFCs also offer special loans for women entrepreneurs. They are customized business loan plans for women to service their needs and give them a chance to build a competitive business in the market.

Why to take a Business Loan

Businessmen or entrepreneurs take a business loan to meet their various business-related needs.

Business loan for working capital

Even in an ongoing business, businessmen require an ample amount of funds to sustain and fund 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 in 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 thought comes to their mind when the 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 product i.e. the very own business. But expanding the business beyond local capacities is not easy, financially speaking. It surely needs strong monetary backing to meet the needs of expanding the business. Whether its location, equipment, new recruitments or paying for the new communication channel, businessmen need a bucket full of finance. Thus they opt for a business expansion loan. By taking this loan, businessmen make sure that their respective business touches new heights of success.

Business loan for buying machinery or equipment

Almost all types of businesses need specific machinery or equipment for smooth functioning. Many times these types of 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 this equipment or by putting them out on lease later.

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 for many businesses to have a well-sorted customized infrastructure for smooth day-to-day affairs. Having any kind of infrastructure, small or large, does not come in cheap. Thus businessmen opt for this type of loan.

Benefits of a Business Loan

You can avail of this loan to tackle your immediate financial requirements like daily capital needs.

Business loans can also help in tax benefits for the company.
You don’t have to put anything as collateral or need a guarantee for a business loan up to Rs. 75,00,000.

Banks offer customized repayment schemes for business loans. You can repay the business loan Daily, Weekly or fortnightly.

You don’t need to show Income Tax Return for a loan up to 10,00,000.

A business loan offers you a lower interest rate compared to personal loans.

You can avail of a business loan ranging anywhere between Rs.50,000 to Rs. 75,00,000.

Eligibility Criteria to avail for Business Loan

Banks have divided applicants into two categories based on their profession. The eligibility criteria and list of documents change as according to these two categories:

Banks have divided applicants into two categories based on their profession. The eligibility criteria and list of documents change as according to these two categories.

Self Employed Professionals (SEP): Doctors, CA, CS, architects, engineers, etc.

Self Employed Non-Professionals (SENP): Trader, commission agent, contractor, etc.

Also, if you are applying as a company, you can avail loan by applying under the following entities:

Partnerships / Proprietorship
Limited Liability Partnerships
Private Limited Companies

Other important requirements to avail Business Loan:

The minimum turnover of your business should be Rs. 60,00,000. The turnover should be on a positive track.
You should have a minimum of 3 years experience in current business and 5 years of experience in the overall business industry.
Your business must be making a profit for the last 2 years.
The age of the applicant should be a minimum of 25 years and a maximum of 65 years. You should have paid your business Income Tax Returns for the last 2 years.
You should have paid your business’s Income Tax Returns for the last 2 years.
The borrowers should have a strong credit history. They should have a credit report ready for bank reviewing.

Documents Required to avail a Business Loan

Neatly signed and filled the Business Loan application form.
Passport-size photographs.
Identity and signature proof – Passport, Pan card, Driving License, Voter ID card, Aadhar card, employee identity card in case of government employees.
Address Proof – Bank statement, Rent Agreement, Voter ID card, Ration card, Passport, Driving License, telephone/electricity/water/credit card bill, or Property tax.
Age Proof – A voter ID card, Secondary school leaving certificate (class 10), birth certificate, Passport, Aadhar Card, pension payment order or Receipt of LIC policy.
PAN card requirement for Companies/Firm/Individuals.
Copy of details of all existing loans.
Bank statements of last 6 months from application date.
Business proof (registration of business).
Copy of ITR/Assessment Orders of 3 years.
Copy of challans proving that Advance Income Tax has been paid.
Balance sheet and Profit & Loss details of business from last 2 years. These details should be certified by CA. Proof of continuation which will include ITR, trade license, establishment, and sales tax certificate.

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