Loans are a great source to financing your business. With Business loans you can start a new business, expand operations of your existing business or purchase new machinery or set up a new plant. The need for financing new business is increasing day by day with the increased number of businesses in India.
Documents required for a business loan:
- Identity Verification ( for both company and individual)
- Address Proof (Voter ID, Passport or Driving License, Aadhaar Card, PAN card)
- Financial statements for the previous six months.
- Income records from the last two years.
- Proof of continuity (ITR, Trade License, Sales Tax Certificate)
The following are the business loan criteria that must be met:
Nationality: Indian
Age: 24 years to 70 years
Employment position: Self-employed or at least three years of stable business
A CIBIL score of 685 or higher is required.
Factors to consider before taking a business loan:
- When you opt for a business loan, find out how much it will cost you.
- Determine the cost of a credit facility you intend to take out.
- Estimate your collateral capabilities.
- Evaluate all of your financing alternatives to find the best fit..
- Recognize the interests and expenses it entails.
- Make sure your business paperwork are in order.
- Evaluation and worthiness of Individual Organizers, Company owners, and Directors’ Credit Ratings or CIBIL Scores.
Banks/ institutions in India that offer business loans:
Following banks/ institutions are offering business loans with competitive interest rates:
1. Kotak Mahindra Bank:
The detail specifications of Kotak Business loans are as follows:
| Loan Amount (in Rs.) | Effective Interest Rate | Interest Rate Type |
| 7.5 Lakhs to 40 lakh | 6.85% to8.15% | Floating |
| 20 lakhs to 1.5 cr. for Abroad study* | 6.85% | Floating |
| Collateral / Security | Not required | |
| Processing Fee | 2% of the loan amount plus GST | |
| Documentation Charges | (Rs. 3500 for loan amount or Rs 6000 for loan up Rs. 10 lakh)plus GST | |
| Eligible Entities | Private Ltd. Companies, Sole Proprietorship, Partnership firms, Trusts and Limited Liability Partnerships engaged only in Manufacturing, Trading or Services sectors | |
| Profit Requirement | For at least 1 year | |
| Business Tenure | Min. 3 years | |
| Annual Turnover | Rs. 40 lakh |
2. HDFC Bank:
Loan amount and other specifications Of HDFC Business Loan are
| Loan Amount | Maximum Rs. 50 lakh |
| Interest Rate | 16% onwards |
| Maximum Repayment Tenure | 48 months |
| Collateral / Security | Not required |
| Processing Fee | Up to 2.50% of loan amount (Minimum Rs. 2,359 – Maximum Rs. 88,500) |
| Documentation Charges | (Rs. 3500 for loan amount or Rs 6000 for loan up Rs. 10 lakh)plus GST |
Eligibility Criteria
| Status of Business | Minimum 3 Years with 5 years of experience |
| Business in same premise | 3 years |
| Property Ownership | Must be Self/ Family owned |
3. Flexi loans Business Loans:
This is a Non-Banking Finance Company that offers different types of finance to SMEs. Details loans products are mentioned below:
| Category | Loan Amount | Interest Rate | Eligibility Criteria | Repayment Tenure | Sales Criteria |
| Term Loan | Up to Rs. 1 crore | 1% per month onwards | Minimum 1 yearOf Business | Up to 24 Months | Minimum Rs 2 Lakh |
| Vendor Financing | Up to ₹2.5 Crore | Determined by the terms and circumstances agreed upon by the involved parties. | At least One year of Business | Up to 12 months typicallyLoan (Against Invoice) Tenure: From 30-120 days | Credit provided up to 90% of |
| Loan against POS | Up to Rs. 1 crore | Decided after credit analysis | At least One year of Business | 3 months to 24 months | Minimum Rs 1 Lakh |
| Line of Credit | Up to Rs. 1 crore | Depends on sales data | At least One year of Business | 3 months to 24 months | Minimum Rs 1 Lakh |
5. Axis Bank
Features of Various Axis Bank Business Loans are as follows:
| Loan Amount | Up to Rs. 30 Lakh |
| Interest Rate | 17% onwards |
| Maximum Repayment Tenure | 36 months |
| Collateral / Security | Not required |
| Processing Fee | 2% of loan amount plus applicable taxes |
| Prepayment Charges | Nil |
| Foreclosure Charges | Up to 4% on the principal outstanding for up to 24 months |
| Minimum Business | 5 years |
Business Loan schemes for Startups by the Indian Government
The Micro, Small, and Medium Enterprises (MSME) sector in India has minimal exposure to structured funding, hence the Indian government opted to carry out MSMEs and new startup business loan packages.
- The Bank Credit Facilitation Scheme: is a programme that allows banks to make loans to each other. It is aimed at satisfying the financial needs of MSME units and is led by the National Small Industries Corporation (NSIC). The NSIC has teamed up with a number of banks to give loans to small businesses. The payback period of the policy is around 5 and 7 years, however it can be expanded up to 11 years in exceptional circumstances.
- Pradhan Mantri Mudra Yojana(PMMY): This policy, led by the Micro Units Development and Refinance Agency(MUDRA), was introduced in 2015 with the goal of providing credit to all types of production, commerce, and industry and service operations. The programme provides three types of loans: Shishu, Kishor, and Tarun, with loan sums starting from Rs.50,000 to Rs.10 lakh. Skilled workers, retailers, vegetable sellers, technicians, service workshops, and others can apply for a Mudra loan.
- Credit Guarantee Scheme (CGS): This credit is available to new and current MSMEs engaged in commercial or industrial operations, with the exception of academic establishments, agricultural, retail sectors, Self Help Groups, and others. Within this scheme, the Credit Guarantee Fund Trust for Micro and Small Enterprises can lend up to Rs.2 crore.
- Sustainable Finance Scheme: The SIDBI is in charge of this programme, which intends to provide loans to businesses that deal with renewable power, sustainable sources, technical equipment, and non-renewable energy. The government created this programme with the goal of assisting the full value chain of greener manufacturing, power efficiency, and sustainable economic projects.
- Psbloansin59minutes.com: This is an online service that involves applying for business loans if you want to start a company. You can borrow up to Rs.10 lakh under the Mudra Loan plan and Rs.5 crore under the MSME Loan program, depending on your qualification and other restrictions. You could also register for a personal loan for up to Rs.20 lakh, a home mortgage worth up to Rs.10 crore, and a vehicle loan worth up to Rs.10 crore.
FAQs
1. Who all are entitled to opt for a small business loan?
The loan is available to any company with less than 500 employees. The programme is open to all states and territories. Anyone who are self-employed, contract employees, or sole entrepreneurs are also entitled.
2. What are the criteria for obtaining a business loan?
The requirements for applying for a business loan in India.
- The applicant must be minimum 21 years of age to maximum 65 years of age.
- For a business loan up to 1,500,000, the company’s revenue must be greater than 150,000 per year, and for a business loan greater than 1,500,000, the operating income must be greater than 300,000.
- Business that is a partnership or a sole proprietorship.
- A last of 25% of each stake can be added to the company’s earnings.
3. How do I proceed towards getting a business loan?
Arranging for a business loan is a smooth procedure. To seek a business loan, customers would have to only:
1) submit complete customer data.
2) Include necessary data about your job or self-employment.
3) Determine the category of corporate loan and the duration of the borrowing.
4) Complete an application and submit it.
