What is Business Loan?
A business loan is the capital which any business can borrow from any lending agencies in case they are incapable of paying themselves. While, there are several reasons, one can opt for a business loan, the most common needs for a business loan is for paying up salary and wages of the employees. Many other companies borrow the funds for the purpose of buying office supplies, inventory or in handling business projects. A business loan is almost similar to a personal loan, but is intended for business use and you can opt for several online marketplace like Deals of Loan, who can better guide you towards the successful loan application for Business.
Business Loan Criteria
The business loan is a bit difficult task to do in comparison to many other loan types. In order to secure loan of this kind, lenders want to know how the business intends to use the borrowed amount, and thus the business owners have to present a clear outline for how the money will be spent.
Business Loan Eligibility
The banks have decided on a fixed criterion for the Business loan and one must follow the below mentioned eligibility criteria to be eligible to borrow business loan:
Limited or Private Limited Company
Partnership or Proprietorship Firm
CA / Self Employed Professional
Business Loan Documents Required
While the list of documents may vary from one bank to another, all the lending agencies whatsoever, follow the similar set of documentation required to be eligible for the business loan. Here is the complete list of documents required for the successful approval of Business Loans:
Proof of your identity: Copy of Aadhaar Card/ Passport/ Voter’s ID card/ Pan Card/ Driving License
Proof of your address: Copy of Aadhaar Card/ Passport/ Voter ID-Card/ Driving License
Bank Statement (last 6 months)
Last two years ITR along with computation of income, Balance sheet and profit & loss accounts. Your financials should be Certified /Audited by a chartered accountant
Proof of Business continuation (ITR/ Trade license / Establishment / Sales Tax certificate)
Proof of Ownership of residence or office.
Other Mandatory Documents (Sole Proprietor Declaration Or Certified Copy of Partnership Deed, Director Certified true copy of Memorandum & Articles of Association & Board resolution (Original)
The required documents in case of individuals are almost similar as those mentioned above.
Firms & Partnerships
The required documents in case of individuals are almost similar as those mentioned above.
Business Loan Interest Rates
|CITIBANK||10.99% – 15.99% Fixed|
|11.25% – 14.49% Fixed|
|CAPITAL FIRST||12% – 18% Fixed|
|TATA CAPITAL||11.99% – 19.50% Fixed|
|HDBFS||13.99% – 16.99% Fixed|
|ICICI BANK||11.59% – 18.49% Fixed|
|ORIENTAL BANK||10.85% – 11.85% Floating|
|HDFC BANK||11.49% – 19.8% Fixed|
|INDUSIND||11.99% – 19% Fixed|
|17.25% – 37% Fixed|
|KOTAK MAHINDRA||11.49% – 20.15% Fixed|
|ADITYA BIRLA||11.5% – 13.25% Fixed|
|HDBFS – Business Loan||15.95% – 18.95% Fixed|
|KOTAK BUSINESS LOAN||12.99% – 14.50% Fixed|
|ALLAHABAD BANK||13.10% Fixed|
|BANK OF BARODA||11.35% – 14.35% Fixed|
|BANK OF INDIA||13% – 14% Fixed|
|CANARA BANK||12.75% Floating|
|CENTRAL BANK||11.5% Floating|
|DENA BANK||13.00% – 14.00% Fixed|
|IDBI BANK||12.45% Floating|
|12.65% to 13.65% Floating|
|KARUR VYSYA||13.35% – 15.85% Floating|
|SOUTH INDIAN BANK||13.00% Fixed|
|SBI||12.90% – 14.90% Fixed|
|TAMILNAD MERCANTILE||14.30% – 16.30% Floating|
|UCO BANK||11.35% – 11.60% Fixed|
|UNION BANK||14.4% Floating|
|VIJAYA BANK||13.50% Fixed|
|YES BANK||14% Fixed|
Interest rates for ICICI, HDFC, Axis Bank
The interest rates for Business loan through ICICI Bank are 11.59% – 18.49% Fixed, while the same in case of HDFC Bank is 11.49% – 19.8% Fixed. The business loans through Axis Bank stands at around 10% + Mark-Up.
Business Categories (Startups, SMEs)
There are various Business categories for Business loans in India. The following are the categories, which can successfully apply for Business loans.
Self Employed Professionals (SEP) – Allopathic doctors, chartered accountants, company secretaries and architects who are practicing their profession. Proof of qualification to be documented.
Self Employed Non Professionals (SENP) – Traders and manufacturers
Entities – Partnerships, Limited Liability Partnership, Private Limited and closely held Limited companies.
Other constitution types depending on their profile on a case to case basis.
Business Loan Vs Personal Loan for Business
Numerous first time business owners don’t have a business setup for banks to assess the eligibility, thus opting for the personal loans turns into the best choice for those entrepreneurs considering all factors and conditions, since the personal loans allow people to utilize the amount as per one’s own wish.
However, personal loans do accompany higher interest rates than most business loans. But there are some high points for personal loans, thus making it a favorable choice for fund your business.
Simple accessibility of loan: You can get a personal loan in a flash on the off chance that you satisfy the essential basic eligibility criteria. A few banks are offering instant personal loan where you can get a pre-endorsed advance by simply strolling to your ATM. So for any crisis identified with your business setting-up stage, personal loan can be your closest companion.
No Collateral woes: Banks typically look for insurance security for business loans. In the event that you are quite recently beginning, you may not generally have a guarantee security to offer. Settling on an individual advance accordingly winds up noticeably less demanding and more powerful as a first time business person.
Downsides of personal loans for business
Personal loans are after all intended for individual costs. Here are a few detriments in the event that you want to take a personal loan for business.
Your borrowing ability gets reduced: When selecting a personal loan for business, you are viably decreasing your shot for any further loans. This is on the grounds that personal loans are accompanied with high interest rates and shorter tenure, which implies heavy EMIs for you.
Higher interest rates: Personal loans are unsecured loans and that is the reason it is charged with higher rates of interest. Business loans might be somewhat difficult to pursue, yet if successful, it may bring down financing costs as the EMIs is comparatively low.
Odds of misuse of personal loans: Taking personal loans for business can without much of a stretch prompt the person to mix both personal and business needs. Crossing the thin line of keeping individual and business needs separate can affect the way you live and handle things personally and at the business level.
Business Loans are carefully fit for business purpose, including old & established business and startups. There are loans, which can be accessible for working capital prerequisites, import of hardware, setting-up of office, and so on. This gives you the flexibility to pick the best loan types for your need as a business person.
Here are a few situations where picking a business loan can function admirably for you as a businessman.
Your business fits the bill for CGS: To advance business the administration offers guarantee free credits up to Rs. 1 crore if your business falls under the credit ensure conspire. So check if your business qualifies under the plan, since choosing a business credit is significantly more lucrative and pocket cordial.
Existing Personal loans: If you as of now, have a personal loans running, odds of getting another would very low. Since personal loans are offered keeping your income in mind, regardless of the possibility that you meet all requirements for one, you may not get sufficient quantum of advance. Picking a business loan is more advantageous in such a situation.
Here are a few situations where a relying upon business loan may not help you.
In case, business has not started: For start-ups, who don’t have their business already setup, a business loan might be difficult to obtain because of absence of ITR and business wage proofs. On the off chance that you are depending on business loans just, it will be troublesome.
High loan amount required: It is hard to get a huge loan amount with regards to business loans, as banks are constantly cautious in allotting loan to business visionaries. This is on account of down time in business can affect them. Depending on a personal loan aides here.
Unsecured business loan accompanied with higher rates of interest: Business loans are of two classes: secured and unsecured. Unsecured business loan accompanied interest rates near that of personal loans. Secured business loans accompanied lower loan fees, but you need to put collateral to the bank.
Every manufacturing unit in India can meet their business expansion requirements with the choice of the bank for Plant & Machinery Loans. You can enjoy the following benefits under machine loan for most of the bank, who are involved in this
Availability of loans up to 10 Crore
Loan Tenure up to 6 years
For purchase of new and refurbished Industrial Machinery
Primary Security will consist of Industrial Machinery being financed
A loan for SME is available for Sole Proprietorship Firms, Partnership Firms, Private limited Companies, Public limited Companies. It comes with the Flexible collateral options in terms of Residential/Commercial/Industrial property/Liquid securities and features the following benefits
Cash Credit or Overdraft for meeting working capital finance requirement.
Letter of Credit to facilitate trade.
Export Credit to provide Pre-Shipment & Post Shipment finance.
Bank Guarantees for meeting financial obligations and improve performance.
Term Loan for purchase of commercial assets & business expansion needs.
Deals of Loan Advantage
In case, you are looking for a business loan, what you have to do is to spend time carrying out a little research, since there are different types of loan on offer from a host of lending agencies.
The easiest way to compare all the loans available at a single place is by using Deals of Loan portal which offers best services to the people looking for Business loans.
With the help of Deals of Loan, you can see details of the rates and features of the business loans on offer and we promise you to help you find the best business loan for your needs.