Businesses need ample amount of investment to fund expenditures related to expansion such as adding new lines to their existing products/services. In such a situation, business loans can come in handy as they provide much needed financial assistance to companies so that they can grow more competitive in the chosen markets. Like any other loan, a business loan is a debt which the company is obligated to pay back to the lender within a specific tenure according to the terms and conditions mentioned in the loan agreement. Start-up Business loans ca n be taken for a variety of essential requirements like starting up a new firm, business expansions, dealer and vendor financing etc.
Larger amounts can be availed depending on various factors including the size of the business, reported profits of the business, existing business liabilities, etc.
Business loans in India are offered in a manner similar to personal loans. Therefore, the documentation to avail a business loan is simple and the turnaround time is relatively short.
Business Loan tenure can be from 12 months to 48 months. In most cases, the borrower can also avail the benefit of prepayment in lieu of a nominal prepayment charge, which provides additional flexibility to the borrower.
Business loan interest rates varies from 15% to 20% which depends on various factors including but not limited to eligibility of the applicant, the size of the business, credit rating/score of applicant, type of business and loan quantum/tenure.
All these entities need to meet the following criteria to avail business loan:
The business owner/professional must be aged between 21 years to 65 years
The business should have been operational for at least 3 years
The business turnover must be at least Rs.1.0 crore per annum with minimum 2 lakhs of profit, however lower amount loans may also be availed as per the lender’s discretion.
A business partner can be a co-applicant in the business loan application. This is in fact recommended as it would increase the probability of getting a loan of higher quantum with longer tenure and interest rate.