Business Loan
Business loans are created to support small businesses and entrepreneurs in fulfilling their capital needs. There are more than 20 banks and financial institutions in the country that offer customized business loans with favourable interest rates to meet your financial needs.
Features and
Benefits
Small business loans can greatly benefit your business by providing financing for various purposes, such as purchasing new equipment, expanding your inventory, and supporting growth plans. The following are additional advantages of obtaining a small business loan.
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Flexibility
You have the option to select from various loan types to meet specific business needs. There are government programs, such as CGTMSE, that offer loans specifically for Micro and Small Enterprises (MSEs) to start, expand, or upgrade their facilities. These government schemes, such as CGTMSE, do not require collateral or third-party guarantees. The guarantee is provided by the trust to the financial institution.
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Convenient Repayment
The flexible nature of business loans is also reflected in the repayment options. Banks offer this flexibility because they understand the complexities involved in running a business. Therefore, they design repayment plans based on the cash flow to alleviate any financial difficulties. Borrowers can adjust their EMI based on the company's financial condition, and also opt for bullet payments for periodic repayment.
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Low Rates of Interest
Compared to private lending institutions, banks offer lower interest rates, especially for government-backed schemes, as they are meant for public welfare rather than financial benefit of the institution. The interest rate for a loan is not just based on the loan amount but also considers other factors such as the loan tenure, viability of the business model, financial standing of the company, and the borrower's credentials. Additional costs, such as the processing fee, are nominal and are a one-time expense.
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Easy Availability
Many banks, including some private lending institutions, offer small business loans without the requirement of collateral. This makes it convenient for small entrepreneurs to obtain such loans and maintain their ventures. The availability of EMI calculators and online applications on the websites of most banks has made the loan application process much more straightforward.
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Grow Your Business
Finance, manpower, and technology are vital components of any business. Of these, finance is a critical aspect that enables a business to secure its other needs. Sufficient cash flow can be instrumental in growing a business, as it can be utilized for various purposes such as securing additional funding, acquiring necessary equipment, or expanding operations. Owners also have the flexibility to allocate the funds as per their discretion, allowing them to cater to the specific needs of their business.
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Tax Benefits
Small business loans not only help in meeting the financial needs of a business but also offer tax benefits. The tax code allows a portion of the profits used for loan repayment to be tax-exempt. This can result in significant tax savings for small business owners.
Eligibility
Criteria
These are the basic criteria set by financial institutions for eligibility for a small business loan.
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Be a resident of India.
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Be a self-employed individual with at least 3 years of business experience.
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Be a minimum of 21 years old.
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Provide proof of business turnover and IT returns from the last 2-3 financial years
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Have a profitable balance sheet for their business.
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Personal Details
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Loan Details
Required
Documents
Listed below are the documents that Small Business loan applicants will have to submit for verification:
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Proof of identity – Aadhaar card, Passport, Voter ID Card, etc.
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Proof of address – Passport, Utility bill, Voter ID card, etc.
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6 months’ bank statements.
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Business Income Tax Certificate, Balance sheet showing profits and loss of the last 2 years that has been certified by a Chartered Accountant.
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Proof of business – establishment license, trade license, etc.
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Sole proprietor deed, partnership deed, etc.
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House property or commercial property documents – for secured business loans.
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