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Business loan is the primary unsecured type of funding, designed to meet the day-to-day business requirements of business owners or enterprises. Borrowers are not pressurized to submit any collateral or security to avail unsecured business loan.

Business loans can be used for business expansion purposes, manage cash flow, buy equipment/machinery, hire/train staff, purchase raw materials, upgrade inventory and much more.

There is no minimum loan limit criteria to borrow, whereas customers can avail collateral-free business loans up to Rs. 1 crore with flexible and customized repayment options.

If you take a loan for new business from a bank or lender, you shall receive a lump sum amount that you need to repay in a defined period of time that is in form of EMIs, at an interest rate that can be fixed or floating rates. There is no minimum loan amount criteria to borrow and the maximum loan amount can go up to Rs. 1 crore, depending upon business requirements. The repayment tenure ranges from 12 months to 5 years. In some case the repayment tenure may exceed as per the sole discretion of the lender.

Top Features of Business Loan:

  • Interest Rate: 11.90% onwards
  • Nature of Loan: Short- and Long-term, Working Capital, Secured and Unsecured Loans
  • Minimum Loan Amount: No Limit to Borrow
  • Maximum Loan Amount: Up to Rs. 1 crore (collateral-free loans), can exceed as per business requirements
  • Repayment Period: From 12 months to 5 years
  • Check and Compare from available business loan options at competitive interest rates.

What are the Business Loan Fees and Charges?

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.

How to Calculate your Business Loan EMI?

Business Loan EMI is calculated from the below mentioned formula:

E = P x r x (1 + r) ^ n / [(1 + r) ^ n - 1]

Above,

E is the Equated Monthly Instalment (EMI)

P is the Principal or Loan amount

r is the rate of interest (calculated monthly)

n is the tenor (calculated monthly)

How is a Business Loan Disbursed?

After your loan application or loan is approved, bank will deposit the required loan amount in your bank account. The time duration of loan processing and disbursal shall vary from lender to lender.

 

Business loan interest rate starts from 11.90% onwards which also depends on the eligibility of the applicant:

Bank/NBFC/Fintech

Interest Rate (p.a.)

Bajaj Finserv

19% onwards

Fullerton Finance

17% onwards

FlexiLoans

17% onwards

IDFC First Bank

19% onwards

HDB Financial Services Ltd.

22% onwards

HDFC Bank

15% onwards

Hero FinCorp

18% onwards

ICICI Bank

16% onwards

IIFL Finance

18% onwards

Indifi Finance

22% onwards

Kotak Mahindra Bank

16% onwards

Lendingkart Finance

17% onwards

NeoGrowth Finance

24% onwards

PaySense Services India Pvt. Ltd.

18% onwards

RBL Bank

19% onwards

SMEcorner

18% onwards

Tata Capital Finance

18% onwards

ZipLoan

16% onwards

Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank, NBFC and RBI.

Below mentioned are the eligibility criteria for business loan:

  • Age Criteria: Minimum 18 years at time of loan application & 65 years at time of loan maturity
  • Indian Citizen with no criminal background
  • Applicant with good credit score and no past loan defaults, if any
  • Fees & Charges, Income, Business Turnover, Operational History, Business Vintage, Credit score and Profitability Criteria shall be defined by the respective financial institution

Below mentioned are the entities that can avail business loan:

  • Individuals
  • Startup Enterprises
  • MSMEs
  • Artisans, Retailers, Manufacturers and Traders
  • Private and Public Limited Companies
  • Closely Held Limited Companies
  • Sole Proprietorship Firms, Partnerships, Limited Liability Partnerships and Large Enterprises engaged
  • only in Manufacturing, Trading or Services sectors
  • NGOs, Co-operative Societies and Trusts
  • Self-employed individuals / Professionals - CAs, Doctors, Architects, Company Secretaries, Allopathic Doctors, Designers, etc.

Eligibility Criteria - Loan for new business - Salaried Applicant

  • Age Criteria: Minimum 18 years and Maximum 65 years
  • Indian Citizen with no criminal records
  • Applicant with no previous loan defaults with any bank

Salaried Applicant must provide below mentioned documents at time of loan application along with KYC documents of applicant and co-applicant or partners:

  • Minimum monthly salary: As per bank’s discretion
  • Last 6 months’ salary slips
  • Last 1 year ITR
  • Office ID card
  • Appointment and offer letter from current employer

Business Loan Online Eligibility Criteria for Self Employed Applicant

  • Age Criteria: Minimum 21 years and Maximum 65 years
  • Business existence for at least 1 year
  • Minimum Annual Turnover: Depends on lender
  • Indian Citizen with no criminal records
  • Applicant with no previous loan defaults with any bank

Salaried Applicant must provide below mentioned documents at time of loan application along with KYC documents of applicant and co-applicant or partners:

  • Last 12 months’ bank statement
  • Last 1 year ITR, GST returns and Sales Tax statement
  • Last 1-year P&L statement – All documents to be audited by CA
  • Copy of Registrations, Licenses and Permissions

Apply for Business loan by following below mentioned steps:

Step 1: Visit paisabazaar.com to check and compare from all the business loan options offered by leading financial institutions.

Step 2: Pick the deal that suits your business requirements by just filling the basic details like your name, mobile number, residence, loan amount, email address, annual turnover & profit, etc.

Step 3: After submitting the details, paisabazaar's customer care professional will contact you to verify the submitted details and to proceed with the discussion on the chosen loan deal.

Step 4: Your business loan application will be sent to respective bank for further verification and then the bank’s representative will further contact you to proceed with loan formalities.

Step 5: After your loan application is approved, within defined working days the approved loan amount shall get disbursed in your mentioned bank account.

steps to apply for business loan

Step 1: Download and Open the Paisabazaar App from Google Play Store or App Store
Step 2: Tap on the Business Loan icon and fill in all the required details
Step 3: Details to be filled shall include Loan Amount, Nature of Employment, Annual Business Turnover, Work Experience, Residence and Residence Type (Owned or Rented)
Step 4: Tap on 'Proceed' to fill in few more details like Business Type, Primary Bank A/C, Nature of Business, Annual Profit, Date of Birth, Full Name and email address
Step 5: Mention details of any loan taken in past, details of existing credit card, if any and Purpose of Loan (Select from Dropdown)
Step 6: Tap to 'Proceed' to Check and Compare from best available loan deals from banks/NBFCs
Step 7: Tap on 'email quote' to get loan related information via email on the mentioned email address or Tap on 'Call' to dial Toll Free number to talk to a loan representative regarding loan details

  • Age Criteria: From 18 years - 65 years
  • Nature of Business: Enterprise engaged in only Services, Trading & Manufacturing Sectors
  • Business Plan: Self-written & Detailed Business Plan
  • Minimum Annual Turnover: Depends on lender
  • Business Vintage: Minimum 2 years
  • Financial History: Good and Stable Financial Past
  • Source of Income: All types of money earning sources
  • CIBIL Score: 700 and above
  • Loan Defaults: No previous loan defaults, if any
  • Ownership: Applicant should own either a Home/ Office/ Shop

Nowadays, banks are giving attractive schemes to women entrepreneurs. These lending schemes are exclusively for women and it gives them relief in terms of interest rates and collateral. Some of the banks also have special departments for women entrepreneurs where they provide them business consulting, training and counseling 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:

Checklist of documents required to apply for business loan

  • Recent Passport-sized Photographs
  • Identity Proof - PAN card, Aadhaar card, Valid passport, Voter's ID card, Driving License
  • Address Proof - Voter's ID card, Aadhar card, Passport, Driving license, Utility bill, Water Bill, Electricity Bill
  • Business Address Proof
  • Proof of business existence for last 3 years
  • Last 6 months' bank statement
  • Last 3 years’ Income Tax Return (ITR)
  • Balance sheet and Profit & Loss account statement
  • Financial documents audited/attested/signed by Certified CA
  • Copy of Trade License
  • Sales Tax Certificate
  • Certified Copy of Partnership Deed
  • GST Registration Certificate
  • Proof of ownership of the possessions used for business activities

You can use business loans for various purposes, as mentioned below:

  • For business expansion or relocation
  • To meet working capital requirements
  • Enhance business cash flow
  • To purchase land or space for business operations
  • To purchase equipment/machinery/raw materials
  • To stock up inventory
  • To pay rent/salaries/hire employees/staff training, etc.
  • Scale-up operations or to upgrade technology
  • New product or technology setup or installation
  • Office premises’ renovation

Term Loan

Currently many types of term loans are available, such as short-term loan, long-term loan and other small business loans. An entrepreneur can avail these loans according to his/her requirements and economical position. Mainly the loan tenure for a short term loan is 12 months and for long-term loan it goes up to 5 years.

Term loans are divided into two parts, unsecured business loans and secured business loans. In secured loans, the collateral or security can be a certain property, machinery or a business ground and they will usually possess lower interest rates as compared to an unsecured one. Most of the business loans are unsecured loans and do not require any collateral or security to be submitted to banks or NBFCs.

Working Capital Loan

Get small business loan and working capital loan to overcome the day-to-day financial requirements of enterprises. The daily expenditure of enterprises include paying-off salaries, buying raw materials, paying rent, undertaking trainings, etc.

MUDRA Loan Under PMMY

Micro Units Development and Refinance Agency (MUDRA) loan is a funding provided by most of the leading banks to Micro, Small and Medium Enterprises (MSMEs) nationwide. Under the Pradhan Mantri MUDRA Yojana, loans of minimum Rs. 50,000 and maximum of Rs. 10 lakh are provided to start an enterprise or an SME unit. Through the Mudra Loan Yojana, the Government wants to ensure that proper funding is provided to first-time entrepreneurs or existing business owners.

PMMY is a scheme launched by Government of India to offer funds up to Rs. 10 lakh to non-farm small/micro enterprises and non-corporate companies. Mudra loan scheme is divided into three categories named as Shishu, Kishore & Tarun wherein these loans are offered by Private Sector Banks, Public Sector Banks, Regional Rural Banks (RRBs), etc. Small business loans are also offered under this scheme.

Loans for Self-employed Entrepreneurs

This is the most popular category among all as the loans for self-employed entrepreneurs are taken in large numbers. The loan amount can range anywhere between Rs. 50,000 being the minimum and can reach up to 10 crore. The interest rate offered depends on the financial history of the applicant and is decided by the lenders as per their discretion.

Stand-Up India

Stand-up India scheme was introduced by Government of India to provide funding to people who come under SC/ST category and women entrepreneurs. The primary purpose of this scheme is to help banks in offering loans between Rs. 10 lakh and Rs. 1 crore to at least one SC/ST borrower and at least one women entrepreneur per bank branch in enabling them to set-up their own enterprise.

Startup India

Startup India Scheme is an initiative by the Government of India that offers financing and handholding support to Startup entities for growth and expansion. Additional key functions include promotion of Startups, wealth creation and employment generation. To avail benefits of government schemes, an entity needs to be recognized as a Startup by applying on Startup India Mobile App/portal and obtaining the certificate of recognition.

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, buyer has the option of buying goods from the seller. Bills that come under bill discounting are termed as ‘bills of exchange’.

Letter of Credit

Letter of credit is a payment instrument used mainly in international trade in which bank provides monetary guarantee to enterprises which deal in import and export of goods. Letter of credit is used for both 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, letter of credit is important to provide payment assurance to the suppliers or exporters.

Point of Sale

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

Overdraft Loan

An overdraft means overdrawing money from ones’ current/savings account. In simpler words, an account holder takes out more money that has been deposited in the account. An agreed rate of interest will be charged, if the overdrawn amount is within the limits of a preceding agreement. 

Read More: Types of business loans

Ques. What is the processing fee for business loans?

Ans. The processing fee varies from bank to bank that can be Nil for a bank and can exceed up to 4% of the loan amount as per the loan requirements.

Ques. What is the best credit score or CIBIL score to get an instant business loans?

Ans. Any CIBIL score that is as close to 900 is considered best by financial institutions.

Ques. What is the maximum amount can I take through a ban loan for business?

Ans. The maximum loan amount offered by banks via business loan is up to Rs. 1 crore.

Ques. What is the interest rate offered by financial institutions to get a business loan?

Ans.
 The interest rate offered by various banks and NBFCs starts from 11.90% onwards.

Ques. How to choose the ideal repayment tenor for business loans?

Ans. Ideally, if you avail short-term loan then the repayment tenure should not exceed 12 months. However, it may increase as per the desired loan amount. The maximum repayment period can be chosen up to 5 years.

Ques. Can I get an instant business loans with a 750 credit score?

Ans. Definitely, any CIBIL/credit score of 750 or above is considered by any financial institution. With a score of 750 you can avail business loans at comparatively low interest rates.

Ques. What is the impact of GST on business loan for new business?

Ans. The GST plays an important role in getting business loans, as more the GST is paid, larger shall be the business volume. Therefore, it becomes easy for banks to rely on such applicants or borrowers.

Ques. What is the minimum turnover requirement for a loan to start a business?

Ans. The minimum annual turnover criteria is defined by the lender and varies from bank to bank.

Ques. How should I choose the best loan to start a business?

Ans. You can visit paisabazaar.com to check and compare from various bank loans for business offered by numerous banks and NBFCs. You can pick the deal that suits your business requirements.

Ques. Who can get Business Loans?

Ans. The below mentioned entities can get business loan:

Individuals, artisans, retailers, manufacturers, traders, Startups, MSMEs, sole proprietorship, partnership firms, LLPs, NGOs, Co-operative societies, trusts and many more.

Ques. What information do you need for small business loan for new business?

Ans. The key information that you require to know before applying for small business loans is as follows:

  • Check whether you meet the eligibility criteria defined by the desired bank
  • Check and gather all the necessary documents required by the lender
  • Check and compare small business loans interest rates from various banks/NBFCs
  • Calculate the small business loans EMI for better cash flow management
  • Check for hidden charges or fees to be charged by the lender
  • Check the availability of loan balance transfer and foreclosure options

Ques. I am 19 years old; can I get a business loan?

Ans. Yes, any individual who is 18 years and above at the time of loan application is eligible to apply for business loan.

Ques. How much is the minimum and maximum loan amount I can get?

Ans. The minimum loan amount offered is Rs. 10,000 and maximum loan amount can exceed Rs. 50 crore, depending on the business requirements and applicant’s profile.

Ques. What is the maximum age of availing business loan?

Ans. The maximum age of availing a business loan is up to 65 years at time of loan maturity.

Ques. What is the business loan tenure?

Ans. The business loan tenure or repayment tenure ranges from 12 months – 5 years, and may exceed depending on business requirements.

Ques. Do I need to submit any collateral to bank before applying for a business loan?

Ans. No, you are not required to submit any collateral to bank or NBFC, for few specific secured business loans, collateral is required.

Ques. Can I get a Business Loan without collateral?

Ans. Yes, you can get an unsecured business loan from financial institutions wherein no collateral is required.

Ques. What are the repayment, pre-payment and foreclosure charges and processing fees of a business loan?

Ans. All the fees and charges of a business loan vary from bank to bank. Every financial institution has different charges, so you need to check online from their official website.

Ques. What are the pre closure and part-prepayment charges in business loans?

Ans. The pre-closure and part-payment charges vary from bank to bank. It may be Nil from some banks and may exceed up to 4%-5% of the loan amount.

Ques: What are the types of business loans in India that I can avail?

Ans: There are different kinds of business loans offered by banks and NBFCs and that include MSME loan, Mudra loan under PMMY, secured and unsecured business loan, short- and long-term loan, working capital loan, equipment finance, line of credit, equipment finance, bill discounting, loan for construction equipment, machinery and equipment purchase loan,

Ques. What are the loan schemes initiated by Government of India?

Ans. Some of the popular schemes include MUDRA scheme under PMMY, SIDBI loan, CGTMSE, PMEGP, Standup India, Startup India, psbloansin59minutes.com, NSIC, NABARD, etc.

Government launches Atmanirbhar Bharat Abhiyan 2020

12 May 2020: Government launches Atmanirbhar Bharat Abhiyan 2020
Launched on 12 May, 2020 by Government of India, Atmanirbhar Bharat Abhiyan or Self-reliant India Scheme 2020 is a funding support scheme for the MSME sector to boost and promote growth and increase employment opportunities in rural and urban areas across India. Its main features include: 

  • MSME Loans worth of Rs. 3 lakh crore
  • Rs. 20,000 crore loan option for MSMEs
  • Repayment Tenure of 48 months with moratorium period offered is 12 months
  • 100% Credit Guarantee Scheme
  • Approx. 50 lakh shopkeepers to benefit, running pedestrian shops
  • Collateral Free Loans to MSMEs
  • For loans up to Rs. 3 lakh, releif of 2% in interest rate
  • Loans of amount Rs. 10,000 offered to pedestrian business owners
  • Manufacturing and Service MSMEs shall be considered as same entities

Self-reliant India is a scheme focusing on MSME sector and it does not mean cutting from rest of the world. New MSME definition was introduced as mentioned:

MSME – Merged Criteria: Investment and Annual Turnover

Sector/Enterprise Type

Micro Enterprise

Small Enterprise

Medium Enterprise

Manufacturing & Services Sector, Both

Investment less than Rs. 1 crore

Turnover less than Rs. 5 crore

Investment less than Rs. 10 crore

Turnover up to Rs. 50 crore

Investment less than Rs. 50 crore

Turnover up to Rs. 250 crore

Business Loan
4.7 / 5 (61 Reviews)

Business Loan

PaisabazaarNo Guarantor Needed
4/5

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I got loan for opening my clothing store from Paisabazaaar without any difficulty. they did ask for any guarantor or third party. Recommended!


Posted on: Dec 29, 2020
PaisabazaarWell Guided
5/5

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I was guided with well-manner..Thanks a lot. i can open my own boutique. Thanks again to Paisabazaar.


Posted on: Dec 29, 2020
PaisabazaarNo collateral or security demanded
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Really Professional...nice experience with paisabazaar.com in getting short-term loan with Axis Bank. No collateral was asked by the bank and it was instant.


Posted on: Dec 29, 2020
Paisabazaarcustomer service was very supportive
4/5

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A big thanks to the customer team of paisabazaar.com, i am from Delhi but always planned to open a resort in Goa. I had finances but not as much that was required. Got it going with Axis bank and their professional staff.


Posted on: Dec 29, 2020
PaisabazaarEasy Documentation
4/5

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Just Amazing !! Thanks a lot paisabazaar for helping me to start my coaching institute. The loan amount was not huge but managed it to get with Axis Bank with few documents and at low interest rates with more benefits.


Posted on: Dec 29, 2020
Paisabazaargreat customer experience
5/5

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I was aware of paisabazaar but have never tried to take any loan. My friend had taken, so he suggested to get loan to start your water dealership from paisabazaar. It was nice experience.


Posted on: Dec 29, 2020