Personal Loans for Business: Process, Eligibility, Documents Required, Features, and Advantages
Are you a self-employed individual looking to attain a start-up loan for your business? In that case, personal loans for business might be what you need. For entrepreneurs to provide their business plans, financials and objectives while setting up their new business could be very difficult. Due to this, obtaining a business loan is challenging.
Fortunately, personal loans for businesses offer high loan value, are flexible regarding their eligibility and require minimal documents. These unsecured loans are available at competitive interest rates and can help you fulfil any of the business-related expenses.
You can get a personal loan for your business within 10-15 minutes after downloading the Navi App. To determine your monthly instalments accurately, Navi also provides a personal loan calculator.
Follow these steps to avail of a personal loan for business at Navi:
- Download the Navi app.
- Select the option of ‘Personal Loan’.
- According to financial requirements, choose the loan amount and EMI amount.
- Fill out your KYC and employment details using PAN and Aadhaar card.
- After reviewing your credit score and the details provided, your loan amount will be processed within 10-15 minutes.
Personal Loan Details
| Loan Amount | Up to ₹20 Lakh |
| Interest Rate | 9.9% to 45% p.a |
| Foreclosure Fee | Nil |
| Tenure | Up to 72 months |
Flexible amount
Through Navi’s digital lending platform, entrepreneurs can get personal loans of up to Rs. 5 lakh instantly. The amount can meet multiple financial needs of a new business.
Flexible loan tenure
The repayment tenure offered by Navi is very flexible and accommodates all financial needs. Your loan tenure can range from 3 months to 5 years, allowing you to plan your EMI payments without any pressure.
No collateral required
Unlike business loans, a personal loan for a business does not require collateral. Self-employed individuals can avail this loan without pledging any assets. So, even without any collateral like a house or a car, you can apply for this loan.
Instant loan disbursal
Navi’s loan disbursal process is completely paperless and easily accessible. After receiving your start-up loan request and checking your credentials, the loan amount is processed within 10-15 minutes.
Minimal business proof
Personal loans for businesses are given based on a borrower’s personal details. Unlike business loans, an individual does not need to provide business continuity proof or CA-certified financial statements to attain this loan. Moreover, there isn’t any eligibility criterion regarding minimum turnover or operation tenure of the business.
Minimal documentation
Navi’s digital lending process requires only basic KYC documents, like ID proof and Address proof. Furthermore, all these documents have to be uploaded and entered online, eliminating the necessity to carry the documents everywhere.
Eligibility of Personal Loans for Business
To be able to attain a personal loan for one’s business, a borrower needs to fulfil the following eligibility criteria:
| Eligibility Criteria | Limit |
| Eligible Age | 25-40 Years |
| Nationality | Indian resident |
| Profession | A full-time salaried employee in the private or public sector, or a self-employed professional |
| Annual Income for Loan Eligibility | Rs. 5 – Rs. 20 lakhs per annum |
| Work Experience Required | At least 3 years |
| CIBIL Score | 750 and above |
Note that the eligibility criteria vary from one lender to another.
Documents Required for Personal loan for Business
While applying for a personal loan to start your business, you need to be able to furnish the following documents:
- KYC documents: Aadhar card and PAN card
- Address proof: Passport, voter ID, Aadhaar card, electricity bill, water bill, driver’s licence, ration card
- Business existence proof: certificate of incorporation, business licence, certificate of registration
- Income proof: Last 3 months’ bank account statements or passbook of previous 6 months
- Income tax returns
- Passport size photograph
Some loan providers may ask you to submit additional documents.
Things to Consider before Applying for a Start-up loan
Even though Navi’s loan application process is quite simple and accessible, there are a few things that borrowers should take into account before applying for funds.
Credit score
Before processing the loan amount, all lenders will check your credit or CIBIL score. It is one of the primary factors which decides whether a borrower gets a loan or not. This is because the score depicts one’s creditworthiness.
Regarding entrepreneurs starting their business, the assumption is that their money flow might not be consistent. Thus, maintaining a high credit score (above 700) becomes crucial. If your credit score is low, applying with a co-applicant will improve your chances of loan approval.
Business planning
When applying for a personal loan to start your business, having a financial plan for your business is crucial. Borrowing less than what you need might not give the start to your business that you desired. Also, you will not be able to apply for another loan soon after your first loan is approved.
Availing of a high-value loan might lead to a financial burden if you don’t have an effective business plan. So, before opting for a loan amount, building a business plan and carefully accessing your financial needs is important.
Interest rate, EMI and loan tenure
All loan providers offer different interest rates, monthly repayment options and loan tenures. Depending on financial needs and business plans, a borrower can compare the offerings of different lenders and make the most suitable decision.
Final Word
If it is your dream to start a business and you are looking for urgent funds, you can opt for a cash loan With a hassle-free and completely digital process, you can raise funds easily to start your business. However, a borrower should analyse their financial capacity and requirement to ensure that they’re able to pay the EMIs without any difficulty.
Frequently Asked Questions
Ans: Usually, most loan providers consider a CIBIL score between 300 to 650 as bad. Thus, getting a loan with a CIBIL score of 640 is extremely difficult. Ideally, you should have a credit score of 750 and above to get a personal loan for business without any hassle.
Ans: Yes, borrowers might have to incur certain extra costs while applying for a loan. Financial institutions can levy a processing fee, pre-payment charges, etc. These charges are non-refundable and vary across different banks and NBFCs.
Ans: If you default on your loan payments, then you will incur a late payment fee. Along with that, it will lower your credit score, which will hamper your chances of getting an affordable loan in the future.
Ans: Generally, business loans are available at lower interest rates and offer tax benefits. However, they have stringent document requirements and eligibility criteria. Although personal loans have high-interest rates, they are highly flexible with regard to their requirements. Thus, you should decide after analysing your credentials and financial capacity.
Ans: Every bank and NBFC has a different policy regarding foreclosing a loan. Most lenders allow a borrower to foreclose a personal loan after paying 6-12 regular EMIs. This restriction might not be applicable if you attained the loan at a floating rate.
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