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Facts About Business Loans and Their Benefits

  • 23-Feb-2022

Capital is an essential requirement for any business ranging from small to large, each business faces a financial crisis at a certain stage of business development. In a few cases, owners turn their savings into investment while on other hand most enterprises are left with a single option of business loans.  

To set up a new business or expand an existing business both require capital investment. The need for funds can be varied on a case-to-case basis.   

In most recent years, the Government initiated multiple steps to ease loans processing e.g. online application, minimum documentation, a loan without security..etc.  Business loans in India are offered by several banks & financial institutions to meet day-to-day operational requirements.  


Understand your requirements

As a business owner, you must point out the capital requirement needed for business expansion.  

Determine for how long it's required – short term or long term, this will help the lender to study the case.  

Identify the reason behind looking for a loan whether you want to expand the business to new heights, can avail a business loan or purchase equipment/raw materials & manage day-to-day operational expenses can opt for a working capital loan wisely.  

Also Read:- How to Get Business Loan in Bank


Benefits of Business Loans

These loans are great in terms of meeting working capital requirements as well as expanding business. In addition, Business loan benefits are wide in range as listed below:-  

Affordable Interest Rates: - Business loan interest rate begins from 14.00% p.a & this is one of the most affordable rates as compared to other loans, because of the high competition among lenders gives you more competitive rates and flexibility of negotiation.  

Loan up to 75 lakh: - You can avail of business loans ranging from Rs.50,000 to Rs.75 lakh, select a short-term or long-term loan for all your financial needs.  

Collateral-Free Loan: - No more complexity over mandatory pledging of collateral/security, These loans are unsecured loans which means you don’t need to pledge security.  

Flexible Repayment: - As an Applicant, you can opt for flexible repayment ranges from 12 – 36 months choose as per your needs. This will ultimately reduce your EMI burden & give the flexibility to pay pocket-friendly EMIs. If you are a self-employed professional tenure goes up to 48 months.  

Less Paperwork: - Make your loan process, even more, easier, less documentation makes the entire procedure smoother. There won’t be any heavy paperwork involved.  

Tax Benefits: - Apart from enhancing your business, you can additionally save money through tax benefits by claiming a deduction on the interest rate that you pay on borrowed loans amount. Therefore, it aids to lower the total tax burden.   


Who is eligible for Business loans?  

All bank & NBFCs require their applicant to meet specific criteria, bank to bank certain eligibility might be differed but some of the common requirements are given in the following: -  

  • The applicant age should be above 21 at the time of loan application & must be above 65 years at the time of loan maturity
  • Applicant CIBIL Score must be 750 & above
  • At least 3 years of business continuity required
  • Individuals, Sole proprietorships, limited liability companies, partnership firms, private & public companies are eligible entities.
  • Businesses must generate profit for at least 2 years.
  • The annual turnover of existing business should be Rs.10 lakh & above.

Also Read:- Business Loan Schemes by Government

Documents required for Business Loan

If you are planning to get business loan in India, an applicant needs to arrange certain documents in handy before loan application as listed below: -  

Identity Proof  

(For Individual/Company)

Any one of the followings: -  

  • Aadhaar Card
  • Voter ID Card
  • PAN Card
  • Driving License
  • Passport

Address Proof  

(For Individual/Company)  

Any one of the followings: -  

  • Aadhaar Card
  • Bank Passbook
  • Voter ID Card
  • Utility Bill
  • Rent/Lease Agreement
Income Proof  
  • ITR along with computation
  • Profit & Loss Statement
  • Balance Sheet (last 2 years)
  • Last 3 Years Complete Financial with Tax Audit Report & Annexure
  • Provisional Financial FY 2020 -2021
  • Audited by certified CA
Company Proof  
  • Sole proprietorship Declaration (in case of partnership firm)
  • Partnership Deed (in case of partnership firm)
  • For Private & Public companies - ROC required
  • MOA & AOA
  • Board Resolution
  • List of Authorized Signatories
  • List of Director & Shareholder with CA Certified
Other Mandatory Documents  
  • Duly Filled Application along with 2 Passport Size Photographs
  • Company All Bank Account Updated at Last 1 Year
  • Loan Schedule & Sanction Letter (In case of Running Loans)
  • GST, VAT, SSI & Sale Tax Certificate (If Applicable)

Hence, knowing the facts about business & their benefits in advance are best. Avoiding this fact might result in obligations, Apply through Financeseva for best deals.


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