Overview.

A business loan is a financial product that provides funding to businesses for various purposes, such as expansion, working capital, equipment purchase, inventory management, or other business-related needs. Business loans are a common means for businesses to access capital to support growth, manage cash flow, or navigate challenging economic conditions.

Key Features of Business Loans

• Purpose: For various business needs including expansion and equipment purchase.
• Secured or Unsecured: Available as both secured (requiring collateral) and unsecured loans.
• Loan Amount: Varies based on financial health and creditworthiness.
• Interest Rates: Fixed or variable, affecting the predictability of repayments.
• Repayment Terms: Fixed terms, ranging from short to long-term durations.
• Credit Check: Assessment of business and personal credit history of owners.
• Application Process: Involves submission of various financial and business documents.

How to Get High Business Loan Eligibility

Before applying for the loan, prepare a comprehensive business plan, understand your credit score, decide the loan amount, research available loan options, and keep all necessary 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.

Documentation for Business Loans

The list of documents to be submitted varies based on type of business entity. Submit the following documents to begin with the loan process:

• ITR for the past 2-3 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
• Udyam Adhar 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

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 for your business, usually ranging from a few months to a year or more.
• Annual Revenue: Lenders may have 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: Minimum 21 years at the time of loan application and Maximum 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: Minimum 1 year or above.
• Business Experience: Minimum 1 year, business location to remain the 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.