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.
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.
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.
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.
An individual seeking business loan for its firm, needs to submit below mentioned documents as identity proof, address proof etc.
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|
|4||PDC swap charges||Nil|
|5||Interest and principal statement charges||Nil|
|6||Loan statement charges||Nil|
|7||EMI bounce Charges||Rs. 2500 for every bounce.|
|8||Penal Interest||2% per month|
Get your business loan in four easy steps:-
Lower Interest Rate :- One of the major benefits of business loan is its lower and affordable interest rate; it is customer responsibility to check all available offers before applying for this loan.
Convenient and Accessible :- Bank avails one of the interesting facilities and that is accessibility for all existing as well as new customers to ensure that customers are getting convenient solution of their issues or while performing transaction like withdrawal, deposit and any other transaction. If any customer is associated with particular bank for longer duration then it helps to build credit and trust between them. A superb credit record or history will help to get lending facility with ease.
Applicant Income Tax Based Benefits :- Customer will be eligible for exemption in income tax as per provision of IT act of India. As we know that earned benefits is used to repay EMI. It helps to get exemption in income tax.
Non Profit Sharing Facility :- As per norms of business loan, any bank will never be involved in any decision related to loss or profit in business of respective authority. It is customer who will be free to take final call on amount to use them accordingly.
Availability of Multiple Loan Option :- These days almost every bank avails the facility to promote business through their several scheme and program. One of the major sources of income is interest rate imposed on customer. Sometimes banks avails add on privilege for all customers to make overall processing quite effective.
Comparison among all Offers availed by Banks :- If you want to apply for business loan then use authentic and reliable online tools to compare all factors along with applicable taxes, offers of Non Banking Financial Company (NBFC) and other facilities before finalizing the processing. In modern time it is handy to understand all business related processing to make things easier for all associated members.
These days business loan pay important role to boost the business as per strategy applied by the respective person or company to take their tasks into different level, to arrange fund for respective task is quite important and without funding that too in affordable interest rates makes things easier for growth of organization with ease. Some other facts are outlined below that customer must remember while applying for business loan
Credit of Business :- If business is new then this fact is not as important but when it comes to existing and successfully running then credit of business will play important role in approval of amount.
Credit of Individual :- Apart from credit of company, credit of individual is equally important will pay similar contribution in amount approval. This is so important because almost every bank follow strict guideline to make processing transparent and interesting.
Industry Experience :- It will be hard to get loan from bank if business is new and inexperienced. Someone who got experience of industry will complete the entire processing with ease. Only thing that matter is knowledge of industry along with experience, as per condition set by banks.
Large Scale Asset Base :- If company is cable from security and collateral then bank will easily their approve their loan. Apart from this entire processing will be quicker that too without any risk.
Strong Business Plan :- Without strong and reliable business plan along with its blueprint regarding execution it will be tough to get approval from banks. It is necessary to understand the importance of proper planning to make any business successful.
|Bank Name||Business Loan Interest Rates||Processing Fee|
|RBL Bank||20.00%||3% of loan amount|
|Tata Capital||18.00%||From 1.50% to 2.50%|
|Lendingkart||18.00%||2% of loan amount|
|Bajaj Finserv||18.00%||Upto 2% of loan amount|
|IDFC First Bank||22.00%||2.00%|
|SBI Business Loan||11.20%||From 2% to 3%|
|HDFC Bank Business Loan||15.65%||Starting from 0.99%, Max 2.50%|
|ICICI Bank Business Loan||16.49%||Starting from 0.99%, Up to 2%|
|IIFL||13.00%||Up to 2%|
|Bank of Maharashtra||14.50%||1% of loan amount, Min Rs. 1,000|
|Kotak Bank||16.00%||Upto 2%|
|Neogrowth||19.50%||2.5% of loan amount|
|Yes Bank||16.25%||Up to 2%|
|Allahabad Bank||11.15%||Rs. 229 - per lac, Min Rs. 2,038 Max Rs. 22,928|
|PNB||12.65%||1.8% + taxes|
|OBC||11.40%||0.50% of Loan Amount|
|Indian Overseas Bank||14.90%||Rs. 204 per lakh|
|Dhan Laxmi Bank||13.15%|
|Andhra Bank||15.75%||Case to Case|
|United Bank of India||13.00%||1.15%|
|Corporation Bank||13.55%||1.5%, Min Rs. 500|
|Syndicate Bank||12.65%||0.5%, Min Rs. 500|
|Bank of Baroda||14.10%||Upto 1%|
Usually, customer need to follow steps specified below, When they apply for business loan
1. Be ready with all required documents.
2. Calculate the approx amount or estimated costs for your business.
3. Consult with your adviser or ask to any expert.
4. Collect the information about interest rate, processing fees and other applicable charges.
5. As per need pick sort term or long term loan to continue your business.
6. Contact to customer support team of respective bank or financial organization to get the answer of each and every question that you have in your mind.
To get funding for your business, you need to follow certain guideline to make overall processing easier and secure.
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