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Looking for an easy and instant Business Loan?

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  • Perhaps you may require funds to increase the production, purchase new machinery, expand market penetration or meet day to day operational expenses.
  • Treat us as your “Sathi” partner to find the best Business Loan offers for you.
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What is Business Loan?

A business loan is a debt taken by an entrepreneur to expand the business. The purpose of a business loan can be a business expansion or meeting the urgent needs of the business.

A business may require funds to increase the production, purchase new machinery, expand market penetration or meet day to day operational expenses. To meet all these necessities a business can avail collateral-free financing from a bank or a non-financial banking company.

Types of Business Loan

  • Business Term Loan
  • Working Capital Loan
  • Machinery Loan
  • Business Line of Credit
  • Invoice Financing
  • SME Loan
  • Commercial Loan

 

Every business is different and they have different needs. Travel business is different from a hotel business. Travel agencies may need money to purchase tickets whereas a hotel or a restaurant requires money for renovation. So there are various types of business loans available to cater to various business requirements.

 

1. Business Term Loan – This type of debt is given for a fixed term. Loan repayment tenure can be short (1 to 5 years) or long up-to 20 years. The borrower will repay the loan in equal instalments. Business term loans can be used for any purpose and they are collateral free debt. These business loans given by the loan provider are based on business credit score, average yearly or monthly revenue, and overall creditworthiness of the business.

Advantages and disadvantages of Business Loan

  • A business loan can be used for any business purpose
  • The business will repay the loan in equal instalments over a fixed period
  • Quick approval and disbursal
  • Collateral free debt

  • Some lenders may levy early repayment charges on the business loan
  • The higher interest rate in case of poor business credit ratings

2. Working Capital Loan – Every business requires money to finance its day to day operations. Any business which faces difficulty in managing its day to day operations due to inadequate cash inflow can seek and apply for a working capital loan which will provide adequate and constant cash inflow. If your business requires funds to purchase raw material or to pay staff salaries, the working capital loan is the best option.

Advantages and disadvantages of Working Capital Loan

  • Working capital loans provide liquidity and adequate cash inflow to finance the everyday operation of the business
  • Quick approval and disbursal
  • Collateral free method of debt financing
  • Equity sharing is not required

  • Working capital loans can’t be used to finance a new business project or for business operations
  • The higher interest rate in case of poor business credit ratings

3. Machinery Loan – It is also known as business equipment loan. Machinery loan is taken by a business due to the following reasons.

  • To repair an existing machinery
  • To upgrade a machinery
  • To purchase new machinery

Machinery Loans are unsecured which means that there is no need for any kind of collateral. A business can avail equipment and machinery loan from a bank or NBFC.

Advantages and disadvantages of Machinery Loan

  • Once the loan is paid business becomes the owner of the machinery
  • Business can also enjoy tax benefit if the equipment is only for business use
  • Collateral free method of debt financing
  • Equity sharing is not required
  • Quick approval and disbursal

  • More expensive as compared to paying for the machine upfront
  • The higher interest rate in case of poor business credit ratings

4. A Business Line of Credit – A business line of credit is a kind of debt financing which allows the business to use a portion of the borrowed amount as per need without any obligation of using the entire borrowed amount. The entire sectioned amount is there for the business, when they need it, they can use it. Flexibility is the main advantage of this type of debt financing.

Advantages and disadvantages of Business line of credit

  • The fast application process, quick approval and disbursal
  • Collateral free method of debt financing
  • The borrowed amount can be used for any purpose

  • The higher interest rate in case of poor business credit ratings
  • As funds are available, overspending is possible

5. Invoice Financing – It is also known as invoice discounting. It is a kind of debt financing where business takes the loan from the lender against the unpaid invoices. In simple words, business is selling the unpaid invoices to the lenders however it is the responsibility of the business to collect the payments from the customer who own money to them. Lenders will charge some fee which may vary from 1 to 4% of the total invoices value.

Advantages and disadvantages of invoice financing

  • The fast application process, quick approval and disbursal
  • Easy availability of funds against the unpaid invoices

  • The higher discounting rate in case of the poor credit rating of the customer you are dealing with

 

 

Features and Benefits of Business Loan

Helps in Business Expansion

Business loans are helpful for thriving entrepreneurs who hope to start a business or expand the existing business.

Wide Variety of Business Loans as Per the Business Type

Every business is different, they have different needs. Travel business is different from a hotel business. Travel agencies may need money to purchase tickets whereas a hotel or a restaurant requires money for renovation. Thus there are various types of business loans available to cater to various business requirements.

Secured and Unsecured Business Loans

To meet business necessities an entrepreneur can avail collateral-free or secured financing from a loan provider. Both types of financing are available which depends on the loan amount and type of loan an entrepreneur wishes to opt for.

Quick Approval and Disbursal

One of the advantages of business loan is quick approval and disbursal process, many loan providers provide online loan approval in minutes and you will get the financing within 24 hours of the loan application.

Competitive Interest Rate

As there are many loan providers, they compete among themselves that helps the entrepreneurs seeking a business loan to get it at the lowest interest rate.

Flexible Payment Options

Loan providers are getting innovative to acquire more customers; hence they are offering a lot of benefits including flexible payment terms.

Eligibility of Business Loan

Eligibility for business loan differs from provider to provider however below is the generic information.

Eligibility Criteria

AgeThe applicant should be at least 21 years at the time of applying for the loan and should be no older than 65 years at the time of loan maturity
NationalityIndian
Firm TypeSelf-employed individuals, Proprietors, Private Ltd. Co. and Partnership Firms involved in the business of Manufacturing, Trading or Services.
Turn OverThe business should have a minimum turnover of Rs. 50 lakhs.
Business VintageIndividuals who have been in the current business for a minimum of 3 years, with 5 years’ total business experience.
IncomeThe business should have a Minimal Annual Income (ITR) of Rs. 1.5 lakhs per annum

Profitability

Those whose business has been profit-making for the previous 2 years

FAQ - What Documents are Required for Education Loan

Documentation for a business loan is simple however the proper understanding of what documents are needed will help you to get the loan with ease.

  • Application form with Passport-sized Photographs
  • KYC Documents
  • ITR Returns for Two Years
  • Profit/Loss statement and balance sheet for two years
  • 6 months bank certified bank statement
  • Ownership documents – Self-employed individuals, Proprietors, Private Ltd. Co. and Partnership Firms involved in the business of Manufacturing, Trading or Services.
  • Proof of business loan documents issued by statutory authorities