Every business requires capital for meeting operational expenses and growth. Arranging funds through personal resources may not always be possible for you. In such cases, you must consider availing of a loan from banks or non-banking financial companies [NBFCs].
Most entrepreneurs may apply for a loan, which is often customized as per the specific needs of their venture. However, there are certain eligibility criteria that need to be met. Here are four types of businesses that are eligible to apply for these loans:
- Self-employed professionals, such as doctors and chartered accountants
- Sole proprietorship firms
- Partnership firms
- Private limited companies
- Manufacturing ventures
- Retailers
- Trading companies
Here are five features of business loans:
Loan amount
You may avail of a loan from as low as INR 3 lakh up to a maximum amount of INR 75 lakh. In addition, you may avail of a top-up facility on an existing loan.
Loan tenure
To ensure you do not face any financial difficulties, the loan tenure offered by lenders is between six months to three years.
Security
Several lenders do not require any collateral for availing of a business loan in India. This especially makes it easier for small and medium enterprise [SME] owners to apply for such loans because most of the times they are unable to provide any security.
Repayment schedule
Most financial institutions offer flexible repayment schedules while determining the Equated Monthly Installment [EMI]. This ensures you do not undergo any difficulties while servicing the loan.
Rate of interest
In addition to the interest, you may need to incur additional expenses like processing fees, late payment charges and prepayment penalties. Clarifying these expenses before signing the loan agreement is important to determine the effective cost of the loan.
Following are the common documents required to avail of these loans:
- Ownership proof
- Audited financial statements
- Know your customers [KYC] documents, such as photo identity and residential address proof
- Form 16 A, which shows the amount of tax deducted at source [TDS]
- Income tax returns
- Bank statements
Applying for a business loan in India is no longer difficult. You may easily find all the necessary information online on the lenders’ websites. Alternatively, you may check an online portal that enables you to compare the features, eligibility criteria, business loan interest rates and other terms and conditions offered by different lenders. Conducting extensive research on different aspects related to these loans will help you make the right decision.