The business requires a constant flow of funds for long-term sustainability and growth. During financial needs, owners often look for money externally by offering company equity or taking business loans. Business loans in India don't need equity, asset pledging and raising capital. This article will provide insight into types of business loans, benefits and how to apply.
A business loan is given to business owners who need funds for their business operations. The investment expenses include rent, salaries, expanding the business and buying equipment. The lenders evaluate the creditworthiness of owners through business turnover and credit score.
Furthermore, business owners are liable to use the loan for business expenses only, not personal expenses. Also, repayment is one of the critical components as the interest is levied on the principal amount that the borrower has to repay in a defined timeline.
Get an instant business loan to fulfil your business needs, like buying new machines, land, machinery, and basic expenses like salaries and overheads. The business loan is divided into two categories:
These are business loans for small organizations. You can secure property or assets as security for the loan. The collateral assures the lender that you will repay the loan in the stipulated time frame. The lender can seize the collateral if you cannot repay the loan. You can apply for secured loans by personal guarantee or collateral.
The loans depend on creditworthiness; lenders analyze your financial papers and income. These funds can be used to expand the business, buy a machine, and manage inventory.
The applicant can take a 40 lakh loan to repay in 12 months. The interest rate is higher than other loans. The financial institution decides the business loan's speed, duration, and amount.
Letter of Credit - The letter of credit is a loan for a business given to trading companies dealing in international trade. It can be applied for export and import purposes. The company in an overseas industry deals with suppliers and needs payment assurance for business. Hence, it plays an essential role in offering payment assurance.
Term Loan - It can be broadly divided into long-term, intermediate and short-term loans. The duration can vary from 5 years to 12 months. You can apply for a two crore amount per your business need. The lender decides the time for repayment.
Bill Discounting - The applicant gets the funds at discounted interest rates in advance. Financial institutions or banks ask customers to increase their revenue through monthly fees and paid interest.
Machine Loan - Businesses loans without security loans are given to business people to buy or upgrade new equipment. The manufacturing units usually apply for this loan. Also, the loan amount, interest rate, and repayment duration vary from bank to bank.
O** verdraft F acility-** It is a loan wherein the account holder can withdraw cash from his account even if the report has no funds. The interest rate is calculated on the used amount daily.
The credit limit is calculated on credit history, repayment history, cash history and relation with the bank. The overdraft limit is revised occasionally and can be used for any purpose if interest is paid timely. The overdraft is provided against FDs and collaterals.
Loans as per Govt. Schemes - The government has started many loan schemes for women entrepreneurs, MSMEs, manufacturing sectors and services. You can apply for these loans through Public or Private Banks, Regional Rural Banks, NBFCs, Small Finance Banks and Microfinance Institutions.
POS Loans - Point of Sale Loans enables business owners to pay the amount in advance to suppliers via credit or debit card. The interest rate is high compared with other business loans in India. The point sales machines are found in grocery stores, retail shops, shopping malls and supermarkets.
Various benefits of business loans enable you to select the best business loan** in India** per your need. You can apply for the loan online by visiting the lender's website.
Flexible Eligibility - The financial banks have strict criteria for business loans comprising paperwork for loan approval. The lender evaluates business experience, high credit score and annual turnover. The whole procedure is time-consuming. However, NBFCs have a less stringent process and flexible approach to providing instant loans after evaluating creditworthiness.
No Collateral - NBFCs provide loans for businesses without security. The business owners may use these findings as per their needs in managing business operations.
Improve Credit Score - The business loan also improves the business's creditworthiness. You must make timely payments within the time so that, if required, you can take the loan at low-interest rates.
Digital Loan- You are not required to leave the office or home to apply for a business loan. You can visit the website and apply for the loan online. After loan approval and document uploading, the loan amount is dispersed in the account in 24 hours.
Tax Benefits - The interest paid on loan is free from tax.
Every bank or financial institution has its own eligibility criteria and documents required to provide business loans.
The business person should fulfil the below-mentioned criteria for applying for a business loan in India.
Business people must submit the below-mentioned documents while applying for an instant business loan.
You can follow specific steps to get a business loan from the financial institution:
You can get a business loan in India as per your need. Some business loans require collateral, while others don't. The application for the loan depends on your financial income and creditworthiness.
Also, you can easily apply for a loan for business and get the approval for the same with money disbursal in the next 24 hours instantly in your account. You must check the eligibility criteria and documents required and compare terms and conditions with other banks & financial institutions.
The financial institution requires business registration proof like water or electricity bill, PAN card business, individual identity proof like an Aadhaar card, PAN card, passport or driving licence, and certain financial documents like P & L statement, bank statement, passbook and balance sheet.
The credit score should be between 750 and 900 to prove your creditworthiness to repay the loan amount for a loan business . The bank constantly analyses your ability to repay the amount.
Yes, you can get a loan for business without security. The public banks offer around 7.5 lakhs, while private banks offer around 40 lakhs.
You can get a business loan with no money through credit guarantee schemes offered by various banks.
The financial institution or bank often analyzes your credit score and history for lending instant business loans. You can get a business loan at a high-interest rate if you have bad credit. You must check it with your bank and other financial institutions.
You can quickly get a small business loan if you are a trader, manufacturer, retailer or self-employed professional.