Table of Contents
- Top reasons to apply for a business loan
- Types of business loans
- Business term loan
- Working Capital Loan
- Project financing
- Features of availing a business loan
- Age criteria
- The loan amount eligibility
- Loan tenure
- Business vintage
- Benefits of availing a business loan
- No restriction on loan usage
- Convenient and easy
- Attractive interest rates
- No profit sharing
- The business loan works as working capital support
- Tax-benefits
- The documents required for a business loan
- Bottom line
The rule of business is to spend money to make money. Running a business smoothly and successfully is a capital-intensive task. To run a business, one needs to take care of the varied expenses of its operations.
Here, we discuss how a business loan will help banks with all market opportunities and cope up with immediate business financial requirements at the best. Learn all the cost-effective benefits of availing a business loan.
The Government of India has also initiated one of the most popular schemes for growing start-ups in India like Pradhan Mantri Mudra Yojana, Stand-up India Scheme, Credit Guarantee fund scheme for MSMEs. It is also known as an MSME loan. However, all these schemes are business loans without collateral.
Here are the top reasons to apply for a business loan
- Managing operational costs.
- Meeting working capital requirements.
- Upgrading, maintaining, repairing, software, other assets, and purchasing machinery.
- Solidifying business infrastructure.
- Acquiring skilled and trained staff.
- Business expansion.
- Adopting sales or new marketing strategies.
- Inventory restock.
- Diversifying product and service portfolio.
Popular types of business loans
Business term loan:
It works as a high-cost investment like the loan for buying tools and machinery, business expansion, or smooth functioning of business operations.
Working Capital Loan:
It is a small business loan applied to meet daily business expenditure or short-term working capital requirements that fuels a company's growth.
Project financing:
It is long-term business loan usually applied for purchasing heavy machinery, real estate projects, industrial goods, infrastructure, etc. The tenure of a long-term business loan ranges from 10-15 years.
Features of availing a business loan
Age criteria:
The minimum age to apply for a business loan is 21 and the maximum is 60.
The loan amount eligibility
depends on the loan applicant's credit profile. If looking for a collateral-free business loan, the applicant must be running a profitable business for at least two years.
Loan tenure:
A business loan tenure usually ranges between 1 and 3 years. The applicant can choose the repayment tenure.
Business vintage:
It plays a key role in determining the business' authenticity and stability. For this, a loan applicant has to submit an ITR of the past two years.
Benefits of availing a business loan
No restriction on loan usage
It is one of the biggest benefits of availing a business loan. Once the loan is approved, you can use the loan to meet any business requirements. There are no restrictions on the usage of funds. A business loan has full flexibility for usage as per the financial requirement of the business operations.
Convenient and easy
It is easier to succeed with the business as you think. The loan application process of a business loan is hassle-free. You can apply for an online business loan. You can fill the application and submit the relevant documents from anywhere. Post verification of the documents, your loan will get approved. The documentation required to apply for a business loan is also minimal.
Attractive interest rates
It is one of the main benefits of availing a business loan. Many online lenders offer attractive business loan interest rates if you meet the lender's loan eligibility criteria.
No profit sharing
When investors put their hard-earned money in business, they expect to avail of the benefits and profits of the company. But, if you choose a business loan, you need to pay back the only loan to the lender that includes principal and interest amount. The loan one repays in the form of monthly EMIs. If you are thinking about, how to calculate monthly EMIs? Online every lender has its business loan EMI calculator to help you in planning your finances well in advance.
The business loan works as working capital support
A business loan is also known as a working capital loan. It works well when the business faces a liquidity crunch. It is one of the best ways to run smoothly all daily business operations smoothly and meet the short-term expenses without exhausting emergency savings.
Tax-benefits
The interest levied on a business loan is tax-deductible. To avail of most of the tax benefits, always check the loan amount eligibility and interest amount.
Avail the quick business loan and break all the business barriers. Most lenders offers business loans ranging from Rs 5 lakhs to Rs 1 crore. The business loan tenure varies from 12-36 months at lucrative interest rates based on the credit profile.
The documents required for a business loan
- PAN card details
- Passport size photograph
- Filled application
- Identity proof like voter's ID, passport, Aadhaar Card, and driving license
- Address proof like utility bills, passport, Aadhaar Card, Driving License
- Business address proof like property documents
- Income proof like Profit and loss statement of last 6 months of business, latest 2-year ITR, and balance sheet
- Trade license
- All the reliable tax certificates
- Partnership deed copy
Bottom line
There are various ways to meet business requirements like personal loans, getting investors, or taking financial help from friends and family. The biggest drawback of these options is that the repayment tenure is either not fixed or sometimes less. Apart from that, the rate of personal loans is always higher than business loan interest rates. To avoid being in such a situation, availing of a business loan is one of the safest and most secure financing options.
