A business loan is a capital that is provided by the lenders for businesses or entrepreneurs. The consumer must repay the interest and other fees on the principal amount. Barrower should pay the payments regularly at the predetermined schedule. The interest charged for business loans varies from lender to lender. So, one must choose a suitable lender to obtain a loan. These business loans are multipurpose loans, this loan can be used for any requirement related to the business.
What are the Types of Business Loans?
- Secured Business Loan
- Unsecured Business Loan
Secured Business Loan: A secured business loan is a loan where the barrower must have something as collateral to obtain loan. This loan offers cheap interest rates as the collateral provides the guarantee for repayments.
Unsecured Business Loan: An unsecured business loan is a loan where there is no need for any collateral and has higher interest rates.
Know the features of a Business Loan
No Application Fee- For business loans, the consumer can fill the application either online or direct with the finance organization and usually there will be no chargers or fees applicable.
Income- The barrower must provide stable income proof to the bank to get the loan, as the bank needs to know the capacity of the barrower for repaying the loan.
Interest Rates and Tenure- Interest rates vary from bank to bank or finance institutions. The loan amount can be a minimum of Rs 75,000 to INR 50,00,000/- and when it comes to tenure, the banks offer plenty of time to repay the loan, most banks offers about 1-7 years to pay off the loan.
Even with bad credit can apply- Usually, loans are approved only with good credits, but a business loan can also be approved even with bad credits, but the barrower has to provide the assurance that they will be repaying the loan without any delay.
Who are eligible for Business Loan
- Applicant should of the age minimum 25 and maximum 65 years
- The applicant should be running the business with a minimum income of INR 2 lakhs
Documents required to apply for a business loan
- 2 passport size photographs of the applicant.
- Last 2 years ITR income copy
- Service tax copy
- Copy of Certificate of incorporation
- Copy of Business continuity proof
- 6 Months Bank statements for a Savings account
- 1-year account statements for a current savings account
- Registration proof
- KYC Documents (PAN, Aadhaar, Voter ID, Utility bills, etc.)
How to Apply for Business Loan?
Step 1 - Check your eligibility Step 2 - Compare with banks, interest rates, etc. Step 3 - Visit the official website of the bank to apply for a loan Step 4 - Upload all the required documents required Step 5 - Wait for the bank's approval Step 6 - Loan Disbursal
A business loan is one of the convinient loans for the small business establishments, as this type of loans are of 2 types like secured and unsecured, and comes with many features and benefits.