Finwizz

Business

LOAN

Funding is the overarching protagonist in every businessman’s life. It is the first and the last thing discussed while running a business and as we all know, running a business is no mean feat. And no business deserves to be an unfortunate casualty of fund crunch. Which is why business loans exist.

Business loan is a fairly generic term used for different types of finance options that a business can access. In the current context, under Business loan we are largely referring to unsecured income-based loans for self-employed individuals or companies. Unsecured business loans have no requirement for a security or collateral to be submitted and are offered purely on the current financial strength and past credit record of the borrower.

They are not as flexible as overdrafts and other credit lines that support day-to-day working capital requirements but given their unsecured nature, they are relatively easy to avail with simple paperwork and speedy processing. However, that also means that Business loans are usually costlier than other forms of secured business finance.

Documents required:

FOR SELF EMPLOYED PROFESSIONALS

KYC - PAN Card and Aadhar Card
Ownership proof of Residence or Office
Income Tax Returns of last 2 years
Bank Statement of last 6 Months
KYC of Entity
Partnership Deed/MoA

FOR SALARIED PROFESSIONALS

KYC - PAN Card and Aadhar Card
Ownership Proof
Income Tax Returns
Bank Statement of last 6 Months
Degree Certificate & Certificate of Registration

FAQS ON BUSINESS LOAN

What is a Business Loan?

Business loan is a kind of finance aid that anyone can avail in order to meet the urgent

Who can apply for a Business Loan?

Any individual who has a source of income from his/her business, can apply for a business loan. Even businesses which are operating as Partnership Firms, LLPs , Pvt Ltd Companies, and Deemed Ltd. Companies can apply for Business Loan.

When can one apply for a business loan?

One can apply for a business loan when a business need arises that requires financial assistance.

Where can I get a business loan?

Business loans are offered by nationalized banks, private banks, foreign banks and a few non-banking finance companies.

Is there any security or collateral required for a business loan?

Business loans do not require any collateral or security.

What is the maximum amount one can get as a business loan?

Business loans are available in the range of Rs. 1 lakh to Rs. 75 Lakhs depending on the income eligibility of an applicant. However, banks also offer exclusively designed products to offer higher loans which can go as high as Rs. 125 Lakhs.

What is the maximum tenor for a business loan?

The tenor of business loan ranges from 12 months to 60 months. However, it should be noted that tenor is the discretion of the bank and also in most cases, the tenor is restricted to 36 months. A few banks offer 60 months tenor to professionals like Doctors, CAs, etc.

Is there any fee for availing a business loan?

Yes, a one time processing fee is applicable at the time of loan disbursement

How do I repay a business loan?

Business loans are generally repaid by way of Equated Monthly Installment (EMI).

Is there any moratorium period for repaying business loan?

No, a moratorium is not applicable for business loans. Generally, the first EMI starts within 45 days of the disbursement of loan.

What is the rate of interest that will be charged on my business loan?

Rate of interest is a factor of Prime Lending Rate (PLR) as announced by respective banks from time to time that again varies with the volatile market conditions.

How much time does it take to get a business loan?

Generally, it takes 2 to 10 working days to sanction a business loan after completion of all formalities in terms of compliance in documentation.

Can I get a rebate on the interest rate and processing fee?

Yes, a few banks offer special rates to those who have a good reputative relationship with their bank. The relationship could be in the form of a bank account, existing loan, a credit card, along with others.

What if I want to prepay my Business Loan?

Most banks allow its customers to prepay business loans after 6 months of disbursement. Generally, banks charge a penalty of up to 5% as prepayment charges on the principal outstanding.

What if a few EMIs are not paid in time?

It is in the interest of the borrower to repay all the EMI as per schedule. Delay in payment of an EMI or default would badly affect the credibility of the borrower. Moreover, as a consequence, getting a loan at a later stage might get difficult. Generally banks share the credit history of a borrower with credit bureau and in turn, they share data of credit history of the borrower with other banks.