Are you a budding entrepreneur who has wonderful ideas bubbling in his mind to expand the business? If your answer is yes and if you are not able to materialize your plans owing to lack of funds, you need not feel dejected at all. There are many banks and NBFCs who offer business loans in India for people like you. Be it a sole proprietorship or partnership, as long as you meet the eligibility criteria and have the required documents with you, getting a loan for business is not a difficult task at all.
Types of business loan
The business loans that are given by the financial institutions in India are primarily of two types. These two types are
- Secured loans – these loans are given out to applicants against some sort of protection as provided by the applicant. This protection has to be some asset like the property papers or anything valuable. Also, a guarantor or collateral has to be provided by the applicant to get a secured loan.
- Unsecured loan – This type of business loan is basically a risk-free loan for the applicant as there is no requirement of any guarantor or collateral for getting these. The financial institution would give this loan absolutely at their own risk looking at the credit scores of the applicants and reputation of the business
Eligibility and documentation
If you are in need of business loan in India, you would need to know what are the documents required for business loan, so that you can apply and get these loans without much ado. The documents that are required are as follows:
- ITR copy that has computation of income for last 2 years
- Any one from service tax copy or certificate of incorporation as business continuity proof or stability proof
- Current statement of your bank account for last 1 year
- Savings account statement of your bank for last 6 months
- Form 16 for last 2 years
- Registration proof for business and residence ownership
- Any one from PAN card, Voter card, Adhaar Card or Utility bill as KYC document
To be eligible for the business loan, you will have to have a minimum income if 1.5Lakhs from the current business, and you should be running the current business for 3 to 5 years. Lastly, you would be eligible for small business loan if you are minimum 25 years of age at the time of application and 65 years of age at the time of maturity.
Best way to get a business loan
There are many banks and NBFCs who give out loan for business launch or expansion. What matters the most is to find the best rate of interest for these loans so that you do not end up paying extra in the form of interest. Thus, you need to collect and compare as many loan agreements as possible and then make a well-thought and informed choice. The best thing is to seek help from financial advising companies, who have professional team of expert financial advisors who would walk you through the whole process of taking the business loan and make the entire thing a hassle-free experience for you.