Generally everybody wants to have a business. To start and smoothly run the business is not a big task except one should have the funds to operate the things well and in efficient manner.
Now the question arises how one can start the business even when the person doesn’t have the enough funds required for the same. Now the multiple lenders in the form of banks and nbfcs comes forward with their product i.e. business loan. This loan may fulfill the answers of all above questions. What does the business loan really means? A business loan is somewhere as like as personal loan, but the purpose behind the design of this product is to specifically meet the business requirements. Business loan provides a certain amount of money for defined period having rate of interest and monthly repayments.
Business loan can be under any head whether secured or unsecured loans. Secured business loans are loans in which borrower needs to pledge their assets (such as equipment, stock, plant & vehicles etc) with the lenders as security for the debt. Unsecured loans are those loans for which there is no requirement of any security to pledge. Other than business loan, there are also overdraft facilities to fulfill the business needs of the individuals.
Benefits of Business Loans
There may be requirement of institutional funding for multiple reasons. These may include financing of new equipment, expansion, and procurement of large inventories, to crack the financial hurdles in sustaining operationally etc.
For growth of business funds plays a pivotal role and fulfill the business and its working capital requirements. These loans are also beneficial for growing the business and meeting working capital requirements (especially when there are during tough economic scenario). Following are some of the benefits which one can get by availing the business loans.
In business loans there may be different types of loans which one can avail based on their fund requirements. If there are needs of funds to meet the requirements for short to long term period then the customer can opt for term loans. However in case of needs of funds for the operational purposes can go for working capital loans. Overdraft facilities are also there in the product list of the lenders which are used to withdraw the amounts on time to time according to the requirement. The inherent flexibility with this product makes this product easier to use as and when required.
Easy and Convenient Repayment Options
According to the convenience of the customers, lenders offer the different repayment options. The lenders work out the repayment plan according to the cash flows of customer’s business so that customer can easily pay the loan without having any difficulties.
Easy to Afford
There are numbers of criteria’s on the basis of which rates of business loans may vary. These criteria are financial stability of the business, tenure, market dynamics, business existence, borrower’s credentials etc. however the rates of business loans are not exorbitant. In case of business loans, the charges like processing fees are normal which becomes an advantage for businesses to easily borrow from institutions.
Easy to Avail
In India, there are multiple lenders like ICICI bank, HDFC bank, TATA capital, AXIS bank etc that offers business loans. Number of options available with the borrower makes easy for borrower to choose best options and avail the same in best possible manner. This easy to avail option helps the business owners to access the required funds to easily meet their cash flow requirements to sustain their business. Moreover, technical development in the field of digitalization makes it easier for borrowers to apply and avail their loan through online mode. Afinoz.com provides this digital platform from where one can apply for the loan online and also track the status of their loan.
Sustain and Grow Business
Fund is always required to continue the operations of the business efficiently so that business can sustain. Growth of business is somewhere depends on expansion which is linked to requirement of funds so in case of expansion the funds are also required.
Who can avail the business loan?
Any person who is running a business having sound financials can apply for business loan. As there are number of lenders to provide the business loan having different criteria to judge and validate the worthiness of thr borrowers for the business loan.
Following are some of the criteria which lenders considered for their offering of loan
- What is the Constitution of the business: Proprietorship, Partnership, Pvt.Ltd. or Public Ltd.?
- What is the Type of business?
- How much the business’s turnover?
- How much is the Profitability and financial status of the business?
- Is there sufficient Cash flows?
Market’s interest rate of business loan
Generally the interest rates for business loan starts from 17% and it differs banks to banks.
How to compare and applying for business loan?
Before applying for the business loan, applicant should compare the different available options on the basis of following:
- Processing Fee
- Per month's EMI
- Prepayment charges
Following Documents will be required for business loan:
In order to apply for a business loan, you will require the following documents-
- PAN Card for company, firm or individual
- ID Proof (any one out of, copy of Aadhar Card, Passport copy, Voter’s ID copy, driving license)
- Proof of address (any one out of, copy of Aadhar Card, Passport copy, Voter’s ID copy, driving license)
- Bank statement for last 6 months
- Latest ITR along with computation of income, audited financials including P&L account and balance sheet for the last 2 years
- Proof of continuation (ITR/Trade License/Establishment/Sales Tax Certificate)
- In case of Sole Proprietorship, Sole Proprietorship Declaration
- In case of Partnership, certified copy of Partnership Deed
- In case of company certified true copy of Memorandum and Articles of Association