Submit Enquiry for Business Loan

What is a business loan?

A business loan is a credit service offered by banks and non-banking finance companies (NBFCs) to meet the financial necessity of self-employed customers and enterprises.

It can be utilized by individuals, micro, small and medium businesses (MSMEs), business owners, entrepreneurs, professionals (chartered accountants/accountants), and several other business entities.

There are two types of business loans that one can apply for such as secured and unsecured loans. A business secured loan is a type of loan in which a borrower needs to deposit with the lender some security/collateral that he owns. Accordingly, an unsecured business loan does not require depositing collateral/security from the borrower.

Banks and regional financial institutions (“NBFCs”) offer secured and unsecured business loans. These include Fixed Deposit/Current Account/Term Deposit, Cash Credit, Overdraft, Letter of Credit, Bill/Invoice Discounting, Equipment Finance, Machinery Loans, POS loans (stands for Point-of-Sale), Loan under Gulf Guarantee, Loan under Govt. schemes (e.g., Pradhan Mantri Mudra Yojana), etc.

The lowest loan amount starts from Rs. 10,000 that can be benefited from Small Finance Banks (SFBs), Regional Rural Banks (RRBs), or Micro Finance Institutions (MFIs). In addition, borrowers can benefit from collateral-free business loans for up to Rs. 2 crores from leading private and public sector banks. Small business loans are also provided for MSMEs and Startups at competitive interest rates.

Eligibility Criteria

  • A person should be between the ages of 21 and 65 
  • One year of business experience is required
  • The minimum annual turnover for existing enterprises must be 12 lakhs or more
  • A credit score should be at least 750 or above
  • Candidate with no past loan defaults

Eligible Entities

  • Small businesses, entrepreneurs, and self-employed professionals, including entrepreneurs, micro, small, and medium enterprises (MSMEs).
  • Companies in the manufacturing, trading, or service sectors, including private and public limited companies, sole proprietorships, partnership firms, and limited liability partnerships.
  • NGOs, Cooperative Societies, Trusts, and professionals like CAs, Doctors, Architects, Company Secretaries, and Designers. 
  • Self-employed businessman- Sole proprietors, partnership firms, private limited companies, public limited companies, Self-employed professionals – Doctors, CA, CS, Architects.

Document Required

Documents you will need to submit in order to apply for a business loan include:

  • Duly filled application form along with passport-sized photographs
  • Identity proof -PAN Card/Driving License/ Passport/ Voter’s ID/ Aadhaar Card
  • Address Proof-passport/Driving License/Voter’s ID/Aadhaar Card/Utility Bill/Bank Statement/Bank Account Passbook 
  • Last 1 year’s bank statement
  • Copy of Non-Collateral Overdraft, if any
  • Copy of Business Incorporation
  • Any other document required by the lender
  • Last two year’s ITR

Fees & Charges

Business loan fees differ from lender to lender and case to case. The prices and charges depend on the loan amount, interest rate, and repayment tenure.

Interest Rate

According to federal reserve data, the average interest rate on business loans ranges from 14.5% to 36%. However, rates are affected by a variety of factors.

  • Lender
  • Loan type
  • Collateral
  • Financial situation