Business Loans are the perfect financial tool to serve any short-term financial and labour capital needs for self-employed, as well as MSMEs, business owners or entrepreneurs. As per today’s market trend, banks and NBFCs offer a minimum interest rate for Business or MSME loans at 11.90% onwards. These interest rates may vary depending on your annual revenue, creditworthiness, repayment history, CIBIL score, business vintage, financial stability, etc. The interest rates offered by banks under Govt. schemes is even lower, as compared to business loan interest rates offered by banks and NBFCs. Business loans for women entrepreneurs are offered at discounted or concessional rates by several financial institutions.
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A business loan availed with collateral or no security required, it depends on the bank that lends the loan, and the amount of risk they are willing to take. There are many banks available in India that provides credit for small and large businesses, and even business loan to start-ups. Below mentioned is the basic list of eligibility to apply for a business loan in India.
- Age Limit: Applicant must be at least 18 years and a maximum of 65 years
- Income: A business must be profitable for at least the past 2 years
- Applicant’s creditworthiness with good repayment history
- Good CIBIL score (Above 750)
- Company Turnover: turnover is defined by each bank n NBFC separately
- Applicant with no previous defaults with any bank or NBFC
- Indian citizen with no past criminal record
Calculate your Monthly EMI on – Business Loan EMI Calculator
Business Loan for Self-employed (Professionals & Non-professionals)
There are various sorts of business credit customers, some are self-employed or paid, and others are companies and industries. According to a business banks request, a large bank will have two types of customer. The criterion, the applicant’s judgment style, scalability, interest rate and tenure vary according to each customer category. So when applying for a loan, check the customer type you have and look for eligibility criteria.
- Self Employed Professionals (SEP) are usually Chartered Accountants, Allopathic Doctors, Company Secretaries, Architects and Designers
- Self Employed Non-professionals (SENP) as other types of traders and manufacturers. Depend on the loan category, tenure changes as per the eligibility criteria, document requirements, and interest rates
The repayment tenure offered by financial institution ranges from 12 months to 5 years, it may exceed depending upon business requirements and as per bank’s sole discretion. When the tenure is less, EMI tend to be on higher side, which means you can close the debt and pay less for the amount, and you save on paying interest. If you are comfortable with large EMIs, it is better to take this step to pay the minimum interest rate.
Also Read: Business Loan Interest Rates All Banks 2021
Documents Required to apply for a business loan
- Duly filled application form with passport-sized photographs
- Self-written Business Plan
- Identity, Age, Income and Address proofs of applicant, co-applicants, partners and directors
- Applicant and Business PAN Card
- Business address and vintage proof
- Last 1 year ITR, P&L statement and bank statement
- Trade License or Sales Tax Certificate
- Company incorporation or establishment certificate
- Proof of belonging to SC/ST/OBC category, if applicable
- Any other document required by the lender
Customized Credit Services Available
For some of the banks and financial institutions, with a simple three-step process, it is quick and convenient to apply for this loan. The applicant must fill the online application form on the company’s website. Once the information qualifications are satisfied, bank employees will communicate with the applicant within 24-hours regarding a representative, loan issuance and documentation. Finally, the applicant should submit the required documents. After the document verification, the loan is disbursed post the processing fee payment.