Business Loan

Business Loan Interest Rates 2020

Interest Rates amount varies according to the banks or NBFCs. It may also depend upon your business, loan amount and your credit history.

What is a Business Loan?

If you own any business, running it on the desired track is not an easy task. One can face difficulties in maintaining the right pace of the business. A successful company requires sufficient manpower, technology, good infrastructure, and financial resources. Capital is always needed to run the business on the desired track. You can avail a loan for your business from Banks or NBFCs.Business Loan is a scheme that provides you with the required funds to cater to all the needs of your company.

Business Loan can be used for multiple business purposes like buying new machinery, new technology, making payments and many more. You can get the required finance by availing this scheme. It is unsecured Business Loan. There is no need of any collateral. If you are having a small scale industry, you can also avail this SME (Small Medium Enterprises) Loan.

Purpose of a Small Business Loan

Businesses can raise funds by inviting shares and debentures or simply borrowing from banks and other lending institutions and the purpose of doing so could be different:

• Expansion of an existing business.
• For improvement of office premises, constructing a new building.
• Designing a new concept or product in new business.
• Starting a new business.

Features of a Business Loan

Fixed Interest Rate

Business Loan Interest Rates are fixed in nature which means that the rate remains constant throughout the loan period. The rate of interest varies between 14.99% – 48% depending on the lender’s rates and the loan amount borrowed.

Flexible Repayment tenure

The borrowers of a business loan can enjoy flexible repayment tenure of up to 5 years, making it a better option over any other loan. The applicant can also opt for an option of loan pre-payment or foreclosure in which he/she can partly or completely pay off the loan by paying some additional charges defined by the respective bank or NBFC.

Loan Amount

A borrower can avail a business loan can be up to Rs 2 crore or greater amount depending on the requirement of the business and the eligibility. The loan amount mainly depends on the financial credibility of the applicant, past repayments, Credit score and financial institutions check the eligibility of the applicant before lending the amount. Moreover, financial institutions like banks and NBFCs review the applicant’s credit history/score, Identity proof, business existence, income details before loan sanctioning, etc.

Collateral Free Loan

As business Loans are unsecured loans they do not require any collateral from the applicant. However, under specific situations and for very few loans in which plant, machinery or raw material need to be provided as collateral. The applicant otherwise does not require providing any asset like a car or house to avail a business loan.

Types of Business Loans

• Secured Business Loans: In secured business loan, the borrower pledges his valuable property as security to the lender. It is called a secured loan because the property pledged by the consumer is kept secured to the lender. When the borrower fails to make repayments on time, the bank can get possession of the collateral provided. As a result, the creditor can recover easily from the risk occurred by selling property for any purpose.
• Unsecured Business Loans: In an unsecured loan, there is not any hard requirement of any type of collateral. It is hard to get, but cheaper at the same time. Creditors check the credit history before granting the business loan. Creditors evaluate the repayment ability of the business.
• Professional Loans: Professional Loans are given to Self Employed Professionals like Doctor, Engineer, Chartered Accountant, Secretary and any more. For Doctors, there is a specially designed scheme called Doctor’s Loan. These loans are unsecured by nature, i.e, you do not need to pledge any valuable property to the lender and also known as Personal Loan for Self Employed. These loans are not given to manufacturing and trading units. The loan amount varies from 25,000 to Rs. 25 lacs.
• Trade Loans: Trade loans are provided to traders/ businessmen, so as to help them either open a new business or operate/expand an existing one. The amount of loan varies between Rs. 25000 to Rs. 100 lakh, considering the age of the customer, his financial standing, his repayment capacity, tenure of the loan, etc.

Business Loans for Women Entrepreneurs

owadays, women entrepreneurs are being encouraged by providing certain schemes. These schemes are started exclusively for women to provide them with the necessary encouragement. Ownership of 50% and above is essential 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
• Shringaar and Annapurna from Bhartiya Mahila Bank
• Dena Shakti Scheme from Dena Bank
• Mahila Samridhi Yojana
• Cent Kalyani from Central Bank of India
• Stree Shakti Package from State Bank of India

Eligibility For a Business Loan

Check the business loan eligibility calculator below:

Documents Required For Business Loans

Documents required for availing a Business Loan are:

• ID Proof ( Passport / Voters ID card / Driving License) Any one of these
• Residence Proof ( Ration card / Telephone Bill / Electricity Bill / Passport ) Any one of these
• Proof of continuity of business ( Trade License/ Establishment / Sales tax Certificate)
• Latest ITR of 3 years with the audited balance sheet
• Latest 1-year Account Statement
• 2 passport size photographs

Take benefit of our EMI calculator to check the affordability of your Business Loan EMI