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Personal Loans for Business: Process, Eligibility, Documents Required, Features, and Advantages
31 January 2022
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.
How to Apply for a Personal Loan for Business at Navi in Five Easy Steps
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:
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.
Features and Advantages of Start-up Loan at Navi
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.
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.
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.
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.
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.
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
Q1. Can I apply for a start-up loan with a CIBIL score of 640?
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.
Q2. Are there any additional costs involved while applying for a personal loan?
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.
Q3. What happens if I forget to pay one of the equated monthly instalments?
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.
Q4. Should I choose a small business loan or a personal loan for business?
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.
Q5. Can I foreclose my personal loan?
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.
Before you go…
Looking for instant 🚀 personal loans 24*7 anywhere, anytime? Get personal loans up to ₹20 lakh starting at 9.9% p.a. Install the Navi app now!
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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