Business Loan

Note: The mentioned interest rates are subject to change and depend on the sole discretion of the bank, NBFC, SFB, MFI and RBI. Interest Rates are updated as on Oct 2021.

Credit score plays a significant role in the loan approval process. It represents your credit history along with the repayment timeline of availed funding products. Generally, any credit score of 750 or more is considered good by the financial institutions. However, if your credit score is bit low of 650 or above, there are still chances of loan approval from some NBFCs, Small Finance Banks and Micro Finance Institutions.

The credit score eligibility defined by financial institutions are different for individuals, self-employed professionals, MSMEs, retailers or manufacturers and other business entities.

Different ranges of credit score is required by banks/NBFCs, from borrowers who require various types of business loans, such as term loan, working capital loan, letter of credit, overdraft, POS loans, etc. The credit score range defined by the lender for a specific loan product shall vary from applicant to applicant and loan types.

People with New-to-Credit should also start to build a credit score for loan approvals, as applicants with low credit scores are always at higher risk of loan rejections. Startups require even higher credit scores to avail business loans and they are new to the lending market and are about to set up a new business. Therefore, build and maintain a good credit score to enhance the chance of loan approval.

Check the credit score for free and apply for loan online, as per your business requirements.

• Business Tenure: Minimum 1 year or above
• Minimum Annual Turnover: Rs. 12 lakh or above for existing enterprises
• Credit Score: 750 or above
• Applicants with No past loan defaults

Eligible Entities

• Individuals, Business Owners, Entrepreneurs, Self-employed professionals, Startups, and Micro, Small, and Medium Enterprises (MSMEs)
• Private and Public Limited Companies, Sole Proprietorship, Partnership Firms, Limited Liability Partnerships, and Large Enterprises engaged only in Manufacturing, Trading or Services sectors
• NGOs, Co-operative Societies, Trusts and professionals, such as CAs, Doctors, Architects, Company Secretaries, Designers, etc.

When applying for a business loan, you will need to submit the following documents:

• Duly filled application form along with passport-sized photographs
• KYC Documents of the applicant, including PAN card, Passport, Aadhar Card, Driving License, Voter ID card, Utility Bills (Water/Electricity Bills)
• Last 1 years’ bank statement
• Copy of Non-Collateral Overdraft, if any
• Copy of Business Incorporation
• Any other document required by the lender

The fees and charges of business loan vary from lender to lender and case to case. The fees and charges depends on the loan amount, interest rate and repayment tenure.

Apply for Business loan by following below mentioned 4 simple steps:

Step 1: Fill in the required fields as mentioned in the form and Check the box to agree on terms and further Click to ”Unlock Best Offers”.

Step 2: Further you will be required to mention your company details, basic personal information, along with registered mobile number and email address.

Step 3: After submitting all the details, the bank’s representative will contact you to proceed with loan formalities.

Step 4: Once your loan application and documents are verified and approved by the bank, within defined working days the loan amount shall get disbursed in your mentioned bank account.

To promote entrepreneurship among women, lenders have started offering attractive loan schemes to women entrepreneurs. These business financing schemes are exclusively for women and it provides them relief in terms of interest rates and collateral. Some of the banks also have special departments for women entrepreneurs where they provide business consulting, training and counselling along with avenues for marketing and showcasing of their products.

Women entrepreneurs whose ownership is less than 50% in the company are not eligible to avail the benefits of the women’s special schemes.

Some of the popular loan schemes for women entrepreneurs are as follows:

• Mahila Udyam Nidhi Scheme
• Mahila Samridhi Yojana
• Cent Kalyani from the Central Bank of India
• Stree Shakti Package from the State Bank of India
• Shringaar and Annapurna from the State Bank of India
• Dena Shakti Scheme from Bank of Baroda
• Udyogini Scheme

• MUDRA Yojana under PMMY
• PMRY: Prime Minister’s Rojgar Yojana
• PMEGP: The Prime Minister Employment Generation Programme
• CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises
• PSB Loans in 59 minutes
• Standup India
• Startup India
• Credit Guarantee Scheme
• CLCSS: Credit Linked Capital Subsidy Scheme
• National Small Industries Corporation (NSIC) Subsidy

Term Loan

Term loan is offered under various types, such as short-term loan, long-term loan and other small business loans. The loan amount offered under term loan depends on the applicant’s profile and business requirements that can be repaid in 12 months to 5 years, in the form of EMIs. Term loans are divided into two parts, unsecured business loans, and secured business loans. Secured loans require collateral to be submitted with the lender, which is not the case with unsecured business loans.

2. Working Capital Loan

Working capital loans are availed to meet the day-to-day business requirements or to manage business cash flow. The working capital loan can be availed for various other purposes, such as business expansion, buying equipment or machinery, purchasing raw material or goods, paying off salaries or rent, enhancing inventory, and much more.

3. Bill (Invoice) Discounting

Invoice discounting is a financial instrument offered by banks and NBFCs. Bill discounting is a source of working capital finance for the seller of goods on credit. It is a discount which a financial institution takes from a seller’s customer. Through the payment being made by letter of credit, the buyer has the option of buying goods from the seller. Bills that come under bill discounting are termed as ‘bills of exchange’.

4. Letter of Credit

Letter of credit is a payment instrument used mainly in international trade in which the bank provides a monetary guarantee to enterprises that deal in the import and export of goods. Enterprises doing businesses overseas have to deal with unknown suppliers and they require assurance of payment before performing any transaction. Therefore, a letter of credit is important to provide payment assurance to the suppliers or exporters.

5. Point of Sale (POS) Loan

Point of Sale Loan is a type of funding wherein merchants offer their customers some financial assistance at the point of their purchase. Business owners, enterprises, MSMEs, entrepreneurs, and retailers can avail Loans against POS machines to start a new business or to manage their existing businesses. POS Loan is also termed as Merchant Cash Advance in which the loan amount depends on the business volume generated via POS terminals.

6. Overdraft Loan

An overdraft means overdrawing money from ones’ current/savings account even if the account balance is zero. An agreed rate of interest will be charged if the overdrawn amount is within the limits of a preceding agreement. The interest rate is charged only on the utilized amount of the total withdrawal limit.