(Overdraft/Term Loans/ Bill Discounting/ Letter Of Credit)
Businesses need ample amount of investment to fund for start-up expenditures or pay for business extensions. For such purposes, companies take out business loans for their financial assistance. It is a debt which a company is obligated to pay back within a specific tenure according to the terms and conditions of the granted loan. Start-up Business loans can be taken for a variety of essential requirements like starting up a new firm, business expansions, dealer and vendor financing etc. The major benefit of business loans in India is that it does not require any collateral or security and most of the banks sanction business loans with minimal pre-payment charges. Another benefit is that if there is a failure of repaying the loan, then the business owner will not solely face the burden of penalties but the whole company will be liquidated in order to clear the business loan. Overdrafts/ Term Loan/ Bill Discounting / Letter OF Credit are the types of Business loan. Nowadays, banks are giving attractive schemes to women entrepreneurs. These lending schemes are exclusively for women and it gives them relief in terms of interest rates and collateral. Some of banks also have special cells for women entrepreneurs where they provide them business consulting, training and counselling along with avenues for the marketing and showcasing of their products. They also show them the realistic view of their business by giving references of the similar businesses. But Women entrepreneurs whose ownership is less than 50 percent in the company are not allowed availing the benefits of the women’s special schemes. The business loan depends on the annual profit of a business and number of years you are into that business. It also checks the cash flow and other aspects of revenue generation. Once the bank considers all the major factors, it decides the eligibility of loan amount which a business can get. The main criteria of approving a business loan is how much profit a business makes and how the borrower will manage to repay the EMIs and other expenses related to the business.
- Age: Between 21 to 65 years.
- Business Stability: At least 3 years in Business with turnover of min 50 Lakhs per annum with min 2 Lakhs of Profit.
- Credit Score: A good credit score is required
- Loan Amount: Business Loan amount can be from 3Lakh.
- Interest Rates: Business loan interest rates varies from 17% to 25% which depends on the eligibility of the applicant
- Documents Required: * Last 3 years ITR * 6 Months Bank a/c statement * Business Proof * Practice Certificate * Proof of ownership of the possession which are used for business purpose * Photograph * ID Proof * Residence Proof * KYC documents of Co-applicant
- Repayment Option: Monthly Repayment (EMI), Partial Pre-Payment.
- Tenure: Business loan tenure can be 12 months to 48 months.