Business Loans

What is a business loan and its types?

A business loan is a loan taken by the borrower for the purpose of establishing a new business or for the expansion of the existing one. The business loan is avail in order to scale up the in business and enhancing competitiveness. A loan is taken by a businessman to grow its business, upgrade existing business with the latest machineries and equipments and much more at minimal repaying options.

An individual who wants to take business loan should have the complete knowledge of different types of business loan:-
Term loan:- This type of loan is basically taken to finance expansion or set up a new unit. The term loan can be short, long and intermediate term. A term loan can be as short as of 3 years and as long as 10-15 years.
Start-up loan:- in this type of loan, the lender has to like the idea and business plan before giving funding to any startup, lender may ask for some asset as collateral. In such situation financial institution will check for the credibility of the lender.
Working Capital loan:- this loan is required by the a business owner for the completion of its day to day activities. Getting timely access to working capital is very important for any business holder.
Overdraft:- it is a temporary loan. It is obtained by a business owner in case of any unforeseen and unexpected expenditure.An Overdraft helps to ensure that the funds are provided immediately. Depending on the amount of overdraft required, organization has to provide security such as the tangible asset or personal guarantees.


Eligibility For Business Loan:

Self-Employed Professionals (SEP) : Chartered accountants, company secretaries and architect who are practicing their profession. Qualification of documents needs to be submitted.


Self-Employed Non Professional : Traders and manufacturers, retailers, proprietors and service provider.


Entities : Limited liability partnership, partnership, private limited companies.


Features Of Business loan:

Line of credit:- The line of credit is a credit given to an applicant in which the certain limit of loan is approved for said duration. In the line of credit individual is allowed to pay the interest amount and will not have to pay the principal component on monthly basis. One is allowed to deposit the funds when in excess and withdraw fund when required in the business. The individual will have to pay interest only on the amount utilized. This will gives you the availability of maximum funds throughout the tenure.

Loans upto Rs. 45 lakh:- Required loan for short term, long term or immediate term, maximum loan that one can avail is Rs forty five lakh. You can use the loan amount for purchasing machinery, expanding operations or even to increase the working capital.

Online Account Access:- This feature will allow you to access loan details online anywhere or at anytime. This will also enables you to access loan statement and related documents.

No indemnification:- This will gives you the liberty of not putting any personal asset or business asset in order to qualify for the loan. Moreover, fast approval of funds, less paperwork and requires minimum documentation.

Pre Approved Loans:- if you are the existing customer of a financing agency or a bank, it will be easier for you to get loan easily. This will require less paperwork and minimum documentation.


Documents Required For Business Loan:

An individual seeking business loan for its firm, needs to submit below mentioned documents as identity proof, address proof etc.
1. Loan availing applicant needs to submit photograph.
2. The applicant needs to submit know your customer documents.
3. As the individual is seeking for business loan needs to submit certificate as the proof of business existence.
4. An Individual needs to submit all the business related document while applying for loan.
5. Bank account statement of the previous months.


Fees and Charges For Business Loan:

An individual applying for business loan must be aware of the charges and fees that may required to pay:

# Types of fees Charges Applicable
1 Processing Fees Up to 2%
2 Rate of Interest Upto 16%-35%
3 PDC swap charges Nil
3 PDC swap charges Nil
4 Interest and principal statement charges Nil
5 Loan statement charges Nil
6 EMI bounce Charges Rs. 2500 for every bounce.
7 Penal Interest 2% per month
3 Secure fee Nil.

How To Apply For Business Loan:

Get your business loan in four easy steps:-
1. The individual applying for business loan must check eligibility.
2. The applicant is asked to fill the mandatory details and after filling up the details click submit.
3. Select the loan amount and tenure.
4. Submit your application of your business loan.

Machinery Loan:

This loan is taken either to repair or change the broken/ faulty part of the machinery, upgrade the machine with the latest version of it.


Working Capital loan:

This loan is taken in order to shorten the financial burden of the organization.


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