A business loan is a borrowed capital from a financial institution for the purpose of growing or expanding a business. Entrepreneurs and established businesses could apply for a business loan from a lender of their choice. This loan, also known as a commercial loan, is used to fund various requirements of the business.
A business loan is an ideal helping hand for businesses in need of working capital. It helps kick-start the business and enhances production and drives expansion. Many financial institutions offer business loans. Read on to know the features, types, interest rates, eligibility criteria, documents required and how to apply for a business loan.
The steps to apply for business loans are as follows:
Here are the different types of business loans you could choose from-
The rates of interest offered by the Indian Banks are discussed in the following table:
|Name of Bank||Interest Rate (p.a.)|
|HDFC Bank||11.90% p.a. to 21.35%|
|Axis Bank||14.25% – 18.50%|
|State Bank of India (SBI)||As per lender|
|Kotak Mahindra Bank||As per lender|
|Fullerton India||17% p.a. to 21% (floating)|
|Standard Chartered Bank (Business Instalment Loan)||From 17.25%|
|ICICI Bank||From 18%|
|Bajaj Finserv||From 17%|
|IIFL Finance||11.75% to 25.75%|
Rate of Interest (P.a)
Loan Tenure (Months)
For a successful loan borrowing experience, you have to fulfil the lender-specific eligibility parameters. These include:
The documents required to apply for a business loan are:
A business loan is a powerful financial tool that offers commercial support to business enterprises. Often, businesses suffer from various drawbacks. During this time, they require adequate financial support. With the entrance of commercial loans, it becomes much easier for business enterprises to heighten their trade and secure their future. Compare the interest rates of various banks and NBFCs before you apply for a business loan and fulfil your start-up dreams.
Ans: Yes. Previously, women didn’t get much support when it came to commercial activities. But at present, specialised business loan facilities are available for them due to their ongoing entry into the business world.
Ans: The modes of making repayments are available in two ways. Payments can be made two days a week or each month. Moreover, no additional charges are added to a commercial loan.
Ans: At present, you can avail of a loan amount of up to Rs 50 lakhs. The amount will be computed on the basis of earnings, credit score, bank statements, etc.
Ans: One of the vital requirements for availing of a business loan is having a good credit score. If your credit score is 750 or more, you can easily take a loan. However, if this score decreases to less than 700, then there may arise a question regarding the approval of your loan.
Ans: The drawback of business loans are:
– Not every business qualifies for the loan
– The application process is complicated
– Comprises processing fees
– Fixed repayment plan
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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