Long Term Business Loan

Long term loan is a type of credit borrowing that can be repaid over an extended period of time along with added interest and fee. Long term loans are more beneficial and largely preferred by borrowers, as compared to short-term business loans.

Generally, long-term loans are best suited for borrowers availing larger loan amounts. With this type of loan, it becomes easy for business entities to repay the amount with easy EMIs. The repayment tenure is maximum up to 5 years, shall exceed in some cases as per business requirements and sole discretion of the lender. Established enterprises with a stable financial background have more chances of availing long term business loans. 

Interest Rates and Charges

The interest rate offered by financial institutions for long-term loans is comparatively lower as compared to other types of business loans. The interest rate can be both fixed and floating in nature and shall depend on the sole discretion of the lender. The fees and charges shall vary from bank to bank and depend on the applicant’s profile.

Features

• Low interest rates – Depends on business requirements
• Higher loan amount – Up to Rs. 100 crore (Secured Loans)
• Longer repayment period – Up to 5 years
• Benefit of Tax Exemption
• Collateral is required by lender
• Type of Interest rate: Fixed or Floating, both 

Purpose of Long Term Business Loan

Long term business loans are used for various purposes that are as follows:

• Buying land, office space or commercial property for business
• Purchase of assets
• Capacity upgrades
• Purchasing heavy machinery/equipment or commercial vehicles
• Hiring new employees
• Starting new ventures
• Setting up new offices or branches and much more

Eligibility Criteria

• Age Criteria: Minimum 21 years and Maximum 65 years
• Established business owners, entrepreneurs or enterprises can apply
• CIBIL score – Above 700 is recommended
• Business Vintage – Minimum 3 years
• Annual business turnover & Profitability – Depends on lender
• ITR Filed for at least last 2 years
• Enterprise with no previous defaults with any financial institutions

Documents Required for Loan Application

• Business Plan
• Application form along with passport-sized photographs
• KYC documents of applicant, co-applicants, partners, directors, if applicable
• Applicant’s Identity, Age, Address and Income Proofs
• Business vintage and address proof
• Business PAN card along with copy of registrations, certifications and licenses
• Last 12 months’ bank statement along with copy of P&L statement
• Memorandum of Association and Articles of Association
• Ant other related document required by the lender

How to Apply for Long-Term Business Loan

• Check your eligibility before applying for a loan
• Fill in the loan application form
• Submit the loan application form along with required documents online or by visiting the nearest branch of the desired bank
• Submitted application form and documents shall be verified by the bank
• After verification of documents, loan shall be approved by the bank as per their discretion
• After loan approval, required loan amount shall get disbursed in your bank account within defined working days

FAQs

Q. What is the maximum loan amount that can be availed under long-term business loan?

Ans. The maximum loan amount that can be availed is up to Rs. 100 crore, may exceed as per business requirements.

Q. What is the interest rate offered by financial institutions for long-term business loans?

Ans. Nominal interest rate is offered under long-term business loan by financial institutions.

Q. What is the repayment tenure offered by banks and NBFCs for long term funding?

Ans. The maximum repayment tenure is up to 5 years that can exceed depending upon business requirements.

Q. Do I need to submit any collateral for long-term loans?

Ans. Yes, banks do require collateral from the borrower for long-term loan to avoid risk as the loan amount is high along with extended repayment tenure.

Q. Are there any tax benefits if I avail a long-term business loan?

Ans. Yes, definitely borrowers can avail tax exemption benefits from their long-term funding.