Small Business Loan 2022

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Small Business Loan 2022 Highlights

Small Business Loan from Afinoz ✔ Avail Quick Loans for Small Business without Security up to Rs 45 Lakhs ✔ Apply Online for Business Finance with Instant Loan facility ✔ Business Finance with Nil Part-prepayment Charges and vintage of at least 3 years required.


Business loans may be used for a number of purposes, including expanding a business, managing cash flow, buying equipment/machinery, hiring/training workers, purchasing raw materials, updating inventory, and more. MSMEs and startups may also apply for small business loans. There is no minimum loan cap, and customers can get collateral-free business loans up to Rs. 1 crore with flexible and personalized repayment options.

How does the Business loan work?

If you take a loan for a new company from a bank or lender, you will be given a lump sum amount that you must repay over a specified period of time in the form of EMIs, at a fixed or floating interest rate. There is no minimum loan amount requirement, and the maximum loan amount go up to Rs. 1 crore, depending on business needs. The repayment period varies between 1 year and 5 years. In certain cases, the maturity duration can be prolonged at the lender’s absolute discretion.


The Advantages of a Business Loan

  • Interest rate starts at 11.90 percent and go up from there.
  • Nature of the loan: Short- and long-term loans, working capital loans, secured and unsecured loans
  • Borrowing Caps: There are no borrowing limits.
  • Maximum Loan Amount: Up to Rs. 1 crore (collateral-free loans), with the potential to go higher depending on business needs.
  • Duration of repayment: 12 months to 60 months


What are the Fees and Charges for a Business Loan?

The fees and charges associated with a business loan differ from one lender to the next and case to case. The fees and charges are determined by the amount of the loan, the interest rate, and the duration of the repayment period.

How do you work out your EMI for a business loan?

The following formula is used to measure the EMI for a business loan:

E = P x r x (1 + r) n / [(1 + r) n - 1]

  • E stands for Equated Monthly Instalment in the illustration above (EMI)
  • The Principal (or Loan) number is denoted by the letter P.
  • The interest rate (calculated monthly) is r, and 
  • the tenor is n. (calculated monthly)


What is the Method of Getting a Business Loan?

The bank will deposit the appropriate loan amount into your bank account after your loan application or loan is accepted. The time it takes for a loan to be approved and disbursed varies by lender.

Business Loan Interest Rate

The interest rate on a business loan starts at 11.90 percent and varies depending on the applicant's qualifications:


Interest Rate (p.a.)

Bajaj Finserv

18% onwards

Fullerton Finance

17% onwards

Flexi Loans

17% onwards

IDFC First Bank

19% onwards

HDB Financial Services Ltd.

22% onwards


15% onwards

Hero FinCorp

18% onwards


16% onwards

IIFL Finance

18% onwards

Indifi Finance

22% onwards

Kotak Mahindra Bank

16% onwards

Lendingkart Finance

17% onwards

NeoGrowth Finance

24% onwards

PaySense Services India Pvt. Ltd.

18% onwards

RBL Bank

19% onwards


18% onwards

Tata Capital Finance

18% onwards


16% onwards


Generic eligibility criteria for Business loan

The following are the conditions for securing a business loan:

  • Criteria for Age: At the time of loan application, you must be at least 18 years old, and you must be 65 years old when the loan matures.
  • A resident of India who has never been convicted of a crime
  • Fees & Charges, Revenue, Business Turnover, Operating Background, Business Vintage, Credit Score, and Profitability Requirements will be calculated by the financial institution in question.

The following organizations are liable for a business loan:

  • People are individuals.
  • Entrepreneurial Ventures
  • SMALL Companies
  • Retailers, distributors, and traders are all examples of artisans, retailers, and manufacturers.
  • Limited Liability Companies (LLCs) both private and public
  • Limited Liability Companies (LLCs)
  • Firms that are sole proprietorships, companies, limited liability partnerships, and large corporations that are solely involved in manufacturing, trade, or services.
  • Non-Governmental Organisations, Cooperative Societies, and Trusts
  • CAs, Doctors, Engineers, Business Secretaries, Allopathic Doctors, Designers, and other self-employed individuals/professionals

Loan for new company - Salaried Applicant Eligibility Criteria

  • The minimum age is 18 years old and the maximum age is 65 years old.
  • An Indian citizen who has never been convicted of a crime
  • An applicant who has never defaulted on a bank loan.

Salaried applicants must submit the following documents with their loan application, along with the applicant's and co-or applicant's partners' KYC documents:

  • Minimum monthly salary: As determined by the bank
  • Salary slips from the previous six months 
  • Previous year ITR 
  • Office ID card 
  • Present employer's appointment and bid letter


Eligibility Criteria for a Self-Employed Applicant for a Business Loan Online Age

  • Criteria: Minimum age is 21 and maximum age is 65. 
  • For at least a year, the company has been in operation. 
  • Minimum Annual Turnover: It is dependent on the lender. 
  • An Indian citizen who has never been convicted of a crime 
  • Applicant who has never defaulted on a bank loan. 

A salary at the time of loan application, must have the following documents, as well as the applicant's and co-or applicant's partners' KYC documents:

  • Bank statement from the previous 12 months
  • ITRs, GST returns, and sales tax statements from the previous year
  • Last one-year P&L statement – CA will inspect all records.
  • Registrations, licenses, and permissions copies

Factors Influences the Business Loan Eligibility

  • Criteria for age range: 18 years to 65 years old.
  • Nature of Business: This is a one-of-a-kind company that only does business in the service, trading, and manufacturing sectors.
  • Business Plan: A detailed and self-written business plan 
  • Minimum Annual Turnover: varies by lender. 
  • Business vintage: Minimum 2 years 
  • Financial History: A Prosperous and Secure 
  • Past Sources of Income: There are several different ways to make money. 
  • CIBIL Score:  700 and upon 
  • Loan defaults: If any, there have been no past loan defaults. 
  • Ownership: The applicant must own a home, office, or shop.


A common list of documents

  • Passport sized Photographs- should be taken recently 
  • Address Proof - Voter's ID card, Aadhar Card, Passport, Driving license, Utility bill, Water Bill, Electricity Bill
  • Identity Proof - PAN card, Aadhaar card, Valid passport, Voter's ID card, Driving License 
  • Proof of Business Address 
  • Proof of company existence- last six months' bank statement 
  • Income Tax Returns (ITRs) from the previous three years, as well as
  • Balance sheet and profit & loss statement
  • Account Certified, CA audited, attested, and signed financial statements 
  • A copy of the business license Certificate 
  • Sales Tax GST Registration Certificate 
  • Certified Copy of Partnership Deed 
  • Proof of ownership of property used for commercial purposes


➤ FAQs

Ques. Which bank is the most suitable for a business loan?

Based on current interest rates, Corporation Bank is the best bank for obtaining a business loan, since they offer a low-interest rate of 13.50 percent.

Ques. Is it possible to get a loan for a small business in India?

Yes, if you have a sufficient turnover, business stability, and strong credit history, you can apply for a business loan online in your area.

Ques. How do I apply for a business loan in my town?

Under various government schemes such as Mudra loan, CGTMSE, and others, most of the top public and private sector banks in India provide small business loans. Select banks and finance companies, in addition to government schemes, provide unsecured loans to small businesses with an annual turnover of Rs. 1 crore and above, based on an assessment of the company's financials, stability, growth, debt servicing capability, and manage reputation. Some of the new NBFCs have begun to provide business loans with no collateral for even small companies, but the interest rates on these loans are typically higher than those provided by banks.

Ques. When applying for a business loan, what age should the applicant be?

The borrower’s minimum age should be 21 years old and maximum of 65 years.

Ques. Is a business loan affected by a lack of CIBIL history?

Yes, if you don't have a CIBIL background or have a low CIBIL, banks will reject your loan application. In that scenario, you'll have to take out a high-interest loan. Before applying for a loan, banks can require you to take out a gold loan or a credit card to establish some CIBIL background.

Ques. What factors influence the interest rate on my business loan?

Three key factors can influence the interest rate on a business loan: 1. The lower the loan size, the lower the interest rate. 2. The lower the interest rate, the higher the company turnover. 3. You will get a loan at a lower rate if you have been in business for a long time.

Ques. Is it possible to lower my EMI on a business loan?

If the bank allows part or complete prepayment, you can lower your loan EMI. Most banks allow prepayment after six to twelve EMIs have been paid, and some banks only allow prepayment after one EMI. If you have a surplus sum and want to reduce your EMI burden during the loan term, you can easily opt for prepayment

Ques. How should I go about getting a business loan?

You may use a variety of methods to apply. You may meet with a salesperson at a bank branch, contact a loan representative, or apply online at any bank or NBFC's website. You can also use Afinoz to compare business loan rates from all banks and apply for a loan. We will put you in touch with banks that can provide you with the best loan deals at the lowest interest rates. We also assist you in the loan process and enable you to apply for a loan online without having to go through a lengthy application process.

Ques. What is the shortest and longest term of a business loan?

These are usually only taken for a short time. The loan term ranges from 12 months to 60 months in most cases.

Ques. What are the fees associated with an unsecured business loan?

Banks charge the following two fees on loans in addition to the interest rate. Processing fee: When you apply for a loan, you will be charged a processing fee. If you bargain hard enough, the processing fee can be reduced to as little as 3% of the loan sum. Pre-closure fee: If you want to close your loan before the end of the term, you will be charged this fee. This penalty is imposed by banks to compensate for the loss. Pre-foreclosure fees can be as high as 5% of the unpaid loan balance. You should carefully read the terms and conditions of your loan agreement to search for a prepayment clause that is not too stringent in comparison to industry averages.

Ques. What kind of collateral should I put up to get a business loan?

Banks do not require security or collateral to accept business loans, but they do require full documentation to assess your eligibility.

Ques. Banks do not require security or collateral to accept business loans, but they do require full documentation to assess your eligibility.

Yes, if you do not repay the loan on time, it will have an impact on your co-CIBIL applicant's value.

Ques. s it possible to get a business loan with a bad credit score?

Yes, even though you have a poor credit score, you may be able to apply for a business loan. However, lenders can charge you a higher interest rate or require you to apply for a loan with a co-applicant who can assume liability in your absence.