- Cashmate
- Business Loan
Business Loan
Read on to know the criteria required to apply for our Business Loan.
Business Loan Eligibility and Documents
Business Loan- Things to keep in mind!
Get high Business Loan Eligibility
Before applying for the loan, prepare a business plan, know your credit score, decide the loan amount, do some market research on available business loan options, and keep the documents ready.
Common Documents Required
Proof of address & photo identity proof of the promoters, business proof, income proof, partnership deed for partnership firm, articles of association, memorandum of association, board resolution, PAN card, etc.
Criteria for Business Loan Approval
Applicants should be aged between 21 to 65 years, having business vintage of a minimum of 1-2 years. The minimum business turnover and a minimum annual turnover as per the ITR will be required. The business should be profit-making for at least the last 1 year.
Eligibility Criteria & Eligible Entities
- Business Type: Most lenders provide loans to various types of businesses, including sole proprietorships, partnerships, limited liability companies (LLCs), corporations, and more.
- Credit Score: A good credit score is often required to qualify for a business loan. Lenders use your credit history to assess your ability to repay the loan.
- Business Age: Some lenders require a minimum operational history of 6 months to 1 Year for your business.
- Annual Revenue: A minimum annual revenue requirement to ensure your business has a stable income.
- Collateral: Secured loans might require assets as collateral to secure the loan. Collateral can be real estate, equipment, inventory, or other valuable assets.
- Cash Flow: Lenders often evaluate your business's cash flow to determine your ability to repay the loan.
- Age Criteria: Min. 21 years at the time of loan application & Max. 65 years at the time of loan maturity.
- Eligible Entities: Individuals, MSMEs, Sole Proprietorships, Partnership Firms, Public and Private Limited Companies, Limited Liability Partnerships, retailers, traders, manufacturers, and other non-farm income-generating business entities engaged only in the services, trading, and manufacturing sectors
- Business Vintage: Min.6 months to 1 year or above
- Business experience: Min. 1 year, business location to remain same
- Annual Turnover: Shall be defined by the Bank/NBFC
- Credit Score: 700 or above (Preferred by most private and public sector banks)
- Nationality: Indian citizens
- Additional Criteria: Applicants must own either a residence, office, shop, or Godown.
Documentation for Business Loans
The list of documents to be submitted varies based on type of business entity.
- ITR for the past 1-2 years
- Current Bank Account Statement for the last 12 months
- Photocopy of PAN Card
- Address Proof for Residence such as Voter Card, Passport, Aadhar Card, Telephone Bill, Electricity Bill
- Address proof for Business such as the Telephone Bill or Electricity Bill
- Last Financial Year's provisional Financials and future year's projections.
- Company's business profile on the letterhead
- 2 photographs of promoters and property owners.
- Sanction letter and Repayment schedule of existing loan
- GST registration certificate and GST returns of latest 2 years.
- D-Vat/Sale tax registration copy
- Udhayam Aadhar registration certificate
- Rent agreement copy of factory and residence (if property is rented)
- Business Continuity proof of 3 years (3 years old ITR/Company registration etc)
- Company PAN Card, Certificate of Incorporation, MOA, AOA, List of Directors, and Shareholding pattern for Pvt Ltd companies
- Partnership Deed, Company pan Card for Partnership Companies
How to use Business Loan EMI Calculator
Using a business loan EMI (Equated Monthly Installment) calculator can help you estimate your monthly loan repayment amount.
Follow these steps to use a business loan EMI calculator effectively:
- Enter loan amount, interest rate, tenure.
- Click Calculate.
- View EMI, total interest, repayment.
- Adjust tenure if needed.
- Consider extra costs.
- Check budget compatibility.
- Confirm with the lender before finalizing.
Fees and Charges for Business Loan
The fees and charges of business loans usually vary from lender to lender and from case to case. The aforementioned table will give you a fair idea of the fees and charges related to business loans:
Particulars
Charges
FAQs
Yes. There are special schemes that provide easy funding options to startups as well. Any company that is under 5 years old and has a turnover under Rs. 25 Crores can avail these startup loan schemes.
Business loan interest rates are usually negotiable based on several factors. A high credit score, the income generated by the business, and the collateral that you provide for a business loan can help you reduce the interest rates considerably.
Business loans are provided to sole proprietorship firms, partnership firms, limited liability partnerships, and corporates. These loans are reserved for any investment in the business, including making repayments towards overheads, expanding the business or purchasing equipment or goods for the business.
Any movable asset that has good value as per the loan amount that is sanctioned can be provided as security for the loan. This includes property, financial assets like Fixed Deposits and even LIC policies. With most banks, the hypothecation of assets that are purchased using the loan serve as primary security.
In some banks, it is possible to foreclose your business loan. However, it is recommended that you check the foreclosure fees for the loan before you do so. In case this amount is higher than the interest paid towards the loan, it is best avoided. You must also remember that foreclosing loans can affect your credit score negatively. You will also lose access to a large amount of funds when you foreclose any loan.
Yes, part payments are allowed by most banks on business loans. These part payments can be made after you have paid a few EMIs as per the terms of the bank. Some may also have restrictions on the number of part payments that you make on the loan each year.
Each time you apply for a loan, the credit score does reduce. However, when you make regular repayments towards any credit facilities availed, you can restore your credit score. Make sure that you do not miss on any EMI and make the payment on or before the due date to build a strong credit score.