Business Loan

Banks and NBFCs offer two types of Business Loans: secured and unsecured. These loans help individuals to fund their business activities. On MybankingTips you can compare features and interest rates from top lenders to find the best business loan for you. Here, you can apply online for the most suitable business loan for your business needs.

Interest Rate

Usually 10.49% p.a. onwards; some PSUs may offer lower rates

Loan Amount

Can go up to Rs 40 lakh; some lenders may offer higher loan amounts

Tenure

Up to 5 years (some lenders offer repayment period till 8 years)

Processing Fees

0.5% to 4% of loan amount (may vary across lenders)

Last updated: 24 December, 2024

Eligibility Criteria for Business Loan Applicants

Age: Applicants must be 21 years old at the time of application, with a maximum age of 65 years (may vary from lender to lender).
Business Experience: Applicants should already have been in business for at least a minimum of 3 years (some lenders may require 5 years).
Annual Turnover: Minimum annual turnover requirement ranges between Rs 90,000 to more than Rs 250 crore.
Credit Score Requirement: Ideally 750 or above, but some lenders may accept lower scores
Minimum Income: Applicants must have a minimum income of at least ₹ 1 lakh per annum.
Eligible Entities: Includes MSMEs, proprietorships, LLPs, and private and public companies, as well as self-employed individuals and professionals such as doctors, CAs, CSs, architects, etc.

Documents Required for Business Loan

The following documents are required to apply for a business loan.

ID Proof: Voter ID, Driving License, Aadhaar Card, Passport.
PAN Card: Applicable for individuals, partnership firms, and companies.
Address Proof: Telephone/Electricity Bill, Voter ID, Passport, Bank Statement, Driving License, Registered Lease Deed or Sale Agreement, NREGA Card.
Age Proof: Birth Certificate, PAN Card, Aadhaar Card, Passport, etc.
Ownership Documentation: Proof of ownership for residence or office.
Business Continuity and Registration: Evidence of continuous business operation and registration details.
Financial Records: Latest GST returns, 6 months' bank statements, ITR with income computation, balance sheet, and profit/loss account certified by a CA for the past 2 years.
Additional Documents: Sole proprietor declaration/certificate, partnership deed copy, certified MOA, AOA, and Board Resolution.
Photographs: Recent passport-sized photographs of the applicant.

Types of Business Loan in India

Secured Term Loans

Secured Term Loans are loans that need something valuable as a guarantee, like mortgage of immovable property, business assets, or financial securities, from the person applying for the loan.

Unsecured Term Loans

Lenders offer Unsecured Term Loans to MSMEs to meet their business requirements, such as expansion of operations, technology upgradation and meeting the cash flow requirements, without any collateral/security

Secured Overdraft Business Loans

Banks give a special type of loan called Secured Overdraft Business Loans to their customers who already have accounts with them. These loans help businesses with their daily expenses and money needs.

Unsecured Overdraft Business Loans

An Unsecured Overdraft Business Loan is a type of loan that doesn't require any collateral. It allows business owners to withdraw money from their current business accounts up to a set limit, even if the account balance is zero.

Professional Business Loans

Business loans for self-employed professionals, like doctors, architects, and accountants, are available to help them with various business needs.p>

Machinery Finance

Machinery finance is a type of loan that enables individuals to buy machinery and equipment for their business needs.

Letter of Credit

A Letter of Credit (LC) is a payment assurance provided by a lender, helping businesses involved in international trade reduce their credit risk.

Purchase Financing

Lenders provide purchase finance to help manufacturers, traders, and service providers pay for the raw materials and goods they buy from suppliers.

Working Capital Loans

Lenders provide working capital loans to support the everyday needs of businesses, such as buying raw materials and covering wage payments.

Bill Discounting

Bill discounting helps businesses get quick cash for their unpaid bills. When a business gives its invoice to the lender, the lender pays a certain amount upfront after taking a small fee.

Features and Benefits of Business Loan

Banks and NBFCs provide secured and unsecured business loans.
Some banks and NBFCs allow existing business loan customers to get extra funds through top-up loans.
Business loan interest rates depend on the applicant's credit profile, nature of business, type of loan, and collateral.
Quick approval, minimal paperwork, and swift disbursal are key features when applying for business loans online.
Many lenders offer overdraft facilities to existing business loan customers.
Both existing and new customers can apply for pre-approved business loans with quick disbursal and less paperwork.
Some lenders offer special, lower interest rates for women borrowers.
Applying for business loans online is easy, with quick approval and minimal documentation.

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Faqs on Business Loan

The government of India has initiated loan schemes such as the MUDRA Yojana, Stand-Up India, PMEGP, psbloansin59minutes.com, SIDBI loans, and NABARD loans to help businesses and startups.

A credit score of 750 or higher is considered good to obtain a business loan.

Common documents including KYC proofs like Aadhar, PAN, or Voter IDs: proof of business registration, proof of address, an ITR, and financial statements are required for business loans.

A secured business loan requires you to provide assets like property, equipment, or inventory as collateral. On the other hand, an unsecured business loan does not require any collateral.

Yes, you can get unsecured business loans without any collateral.

Business Loan

Eligibility Criteria for Business Loan Applicants

Documents Required for Business Loan