Business Loans in India today are one of the most preferred options when it comes to starting a business or to upgrade the small scale business into bigger ventures. While securing funds for a start up might be one of the difficult challenges, applying for a Business Loan on the other hand is convenient and hassle free. As the business owner, one might feel the need of expanding the business or give financial assistance to the business for which business loan play a vital role in every entrepreneur’s life.
Different Types of Business Loans in India
Different Business require different kind of funding and there can be lot of options as well. Here are a few types of Business Loan listed.
Working Capital Loan
Need to finance your everyday operations of your business? Working Capital might just be the best option for you. Working capital loan works in the form of immediate cash to run the daily operational tasks of the company. Most of the companies do not have a stable working schedule and work in monthly cycles instead. To help with providing the right amount of working goods, manufacturing products and industrial tools working capital loan helps in providing the right amount of funding.
Term Loan
Term Loan is kind of a business loan which is used to for long term financing. This includes purchasing machinery tools, building or even a land. Term Loan is generally used for expanding, diversification, or even mobilizing projects. These loans are repayable in regular installments.
Pradhan Mantri Mudra Yojana (PMMY)
Popularly known as MUDRA Loan Scheme, this focuses on strengthening the MSME industry. MUDRA Loan schemes are given by Small Finance Banks, Non-Banking Financial Companies, Commercial Banks, RRBS, MFIs etc. The MUDRA Scheme is divided into three categories namely – Shishu, Kishor and Tarun specifying the requirement of Business funds accordingly. In order to apply for a MUDRA Loan, one can contact the financial institutions and they can guide you with the appropriate MUDRA business plan.
Stand Up India
Stand Up India focuses on encouraging the Entrepreneurs from SC, ST and women borrowers. This scheme facilitates loans starting from Rs 10 Lakh and Rs 1 Crore mainly for the greenfield enterprises. Greenfield Enterprises include manufacturing or the trading sector.
Top 5 Providers of Business Loan in India
It is important that before you head on to apply for a Business loan, you must do a detailed research of the different business plans that are offered by the Banks and the NBFCs. Here are some of the details you can go through:
| Top 5 Business Loan Providers | |||
| Bank/Institution | Type of Business Loan | Features | Loan Amount |
| HDFC Bank | Unsecured Business Loan | 1. Benefit of Loan Business Loan Balance Transfer
2. HDFC Offers overdraft facility along with flexible tenure options 3. HDFC Business Loan also offers Premium Loan Cover |
Rs 40 Lakh (can go up to Rs 50 Lakh in selected locations) |
| Bajaj Finsev | Unsecured Business Loan | 1. Unsecured Business Loan
2. No collateral required to apply for a Business Loan 3. Bajaj Finserv offers Business Loan at attractive and affordable Interest Rates |
One can avail Business Loan up to Rs 30 Lakh |
| State Bank of India | 1. Asset Backed Loan
2. Asset Backed Loan Commercial Real Estate 3. E dealer finance scheme 4. E vendor finance scheme 5. Fleet Finance 6. Open Term Loan 7. SME eBiz Loan 8. PM Mudra yojana 9. Stand Up India 10. Simplified Small Business Loan 11. SME Credit Score 12. Warehouse Receipt Funding |
1. Business Loan offered for the purpose of manufacturing, services, whole sale retail etc
2. No security or collateral is required for Business Loan 3. SBI Business Loan is also offered for path labs, diagnostic centers, nursing homes etc. |
The Loan Amount varies from product to product. |
| Axis Bank | Unsecured Business Loan | 1. No collateral or security is required
2. Business Loan Balance Transfer option is available 3. Axis Bank offers simplified Access and Minimal Documentation |
Axis Bank offers Business Loan up to Rs 50 Lakh |
| ICICI Bank | 1. Working Capital Finance
2. Term Loans 3. GST Business Loan 4. InstaOD 5. Loans for new Entities 6. Collateral Free Loans 7. Loans without Financials 8. Finance for Importers and Exporters 9. Secured Loan for Merchant Establishment against Credit Card swipes |
1. ICICI Bank offers flexible repayment tenure
2. The tenure of Business Loan is up to 7 years 3. Collateral Free Term Loan is also offered under the CGTMSE scheme. |
The Loan Amount varies from product to product. |
Eligibility Criteria for Small Business Loan
The eligibility criteria for Small Business Loan in India are as follows:
- Credit History:
Business Loan Borrower should be aware of their credit history in order to apply for a Business Loan. Financial Institutions review the Credit Score of the Business Loan borrower before accepting or rejecting the Business Loan Application.
- Financial Statement:
Current and previous financial statements of the borrower are also considered so the financial institutions can evaluate the financial profile of the Loan Applicant.
- Age:
Age plays an important role when it comes to eligibility and applying for a Business Loan. Financial institutions usually give loans to the Individuals with age starting from 21 – 65 years.
- Business Feasibility:
In some cases, one has to project the profit and losses for the past few months while applying for a Business Loan. The borrowers might have to prepare a thorough statement of their businesses and accordingly project.
- Business Plan:
. One of the key criteria before applying for a Business Loan is that one needs to have a detailed and a robust business plan before applying for a business loan. The Financial Institution should be well aware of the business plan, the capital that will be invested in your start ups, the outflow in terms of operations, the marketing strategy, infrastructure, equipment and the capacity to pay off the debts.
Documents Required for Business Loan:
Below are the checklist for the documents that are required to apply for a Business Loan. Though the requirement of documents may vary from bank to bank.
- Identity Proof – This includes Aadhaar/PAN Card/Passport/Voter ID Card
- Address Proof – Ration Card/Telephone Bill/Lease Agreement/Electricity Bill
- Income Proof – Bank Statement of the last 6 months along with the Profit and Loss account of the past two years and ITR
- Mandatory documents like Copy of Partnership deed, Articles of association and Sole Proprietorship Declaration
