Skip to content

Business Loans

It caters to individuals, startups, as well as existing businesses. Any type of enterprise like private and public limited companies, startups, sole proprietorship, partnership firms, limited liability partnerships, MSMEs, SMEs, Trusts, NGOs, Co-operative Societies, etc. are eligible for business loans. Business loan can be availed with or without collateral. If it is Secured Business Loan, the collateral or security can be in the form of commercial or residential property, machinery, equipment, raw material, inventory, stocks, etc. 

Interest Rate, Fees and Charges

Interest Rate : 18% p.a Onwards (The interest rate shall depend on applicant’s profile, loan amount, repayment tenure and applicant’s financial stability, repayment capability, creditworthiness, CIBIL score, etc.)

Processing Fees : Up to 2% (plus applicable taxes) of the loan amount

Stamp Duty and other statutory charges : As per applicable laws of the state.

Commission on Letters of Credit and Bank Guarantee : Up to 2% p.a. commission shall be charged on a pro-rata basis based on the tenure and the amount of non-fund based facility being availed

Commitment fees : To be charged as per the terms and conditions mentioned in the sanction letter

Foreclosure Charges: To be charged as per the terms and conditions mentioned in the sanction letter

Note: The above-mentioned interest rate, fees and charges may change and shall depend on the sole discretion of the Banks and RBI.    

Type of Business Loans

1. Working Capital Finance

Working Capital Financing is used for day-to-day expenses. This loan is designed to meet the working capital expenditure of the business at competitive rate of interest and faster processing of loan application. 

Nature of loan can be of the following types:

  • Cash credit limit or
  • Overdraft facility Export credit to meet pre-shipment and post-shipment expenses
  • Letter of Credit and Buyer Credit to ensure timely delivery of goods
  • Bank Guarantees to help businesses meet financial obligations with ease

Companies engaged in manufacturing, trading or services business are eligible for these loans including sole proprietorship, partnership, private limited company and public limited company. Moreover, Bank accepts multiple collateral options from fixed assets to liquid securities.

2. Term Loans

Businesses can avail term loans to purchase commercial assets or to expand their business. 

Given below are some features of this loan:

  • Borrowers can take benefit of flexible repayment tenure
  • The assessment of loan amount is done on the basis of future cash flows of the business
  • A combination of working capital finance and term loan can also be taken to meet all financial needs of the business
  • The loan tenure can be up to 7 years

3. GST Business Loan

It is a term loan based on GST Returns for micro, small and medium enterprises. This type of Business Loan is beneficial to provide for the working capital needs of a business. Following are a few key features of this loan:

  • There is no need to provide financial documents; loan amount is assessed on the basis of GST Returns
  • Loan is offered in the form of overdraft
  • Self-occupied/commercial /industrial property or high-liquidity securities can be put as collateral
  • Overdraft amount of Rs. 2 crore

4. Overdraft

It is a fixed loan amount which is borrowed for a specific period. This facility offers the flexibility in repayment and interest is charged only on the amount utilized. 

Documentation

Though documentation requirements vary for different business loan products and each Bank, here is a list of some common documents that you may need to submit-

  • PAN Card of Primary Applicant or of the organization
  • Duly filled application form with passport-size photograph of the primary applicant
  • Identity Proof of the applicant– Voter ID, Passport, Driving License, Aadhaar Card, etc.
  • Address Proof –Driving License, Voter’s ID, Passport, Telephone Bill, Electricity Bill (Not older than 3 months), Sale Agreement / Bank Statement (not older than 3 months) Registered Lease Deed, etc.
  • Ownership proof of either residence or office
  • Proof of Business Continuity–Bank Statement, ITR, Certificate of Incorporation, Shops & Establishment Certificate, Partnership Deed, Sales Tax Challans, etc.
  • Financial Documents of the Business such as Profit & Loss Statement and Balance Sheet (duly audited by a registered Chartered Accountant), book-debt and creditors-statement for latest three months, periodic stock, etc.

Eligibility Factors

The following factors affects the business loan eligibility.

  1. Annual sales/turnover
  2. Age of the applicant
  3. Applicant’s creditworthiness and CIBIL score
  4. Nature of business
  5. Business Tenure, Existence & Location
  6. Business Profitability
  7. ITR and Sales Tax Returns
  8. Existing working capital loans, if any
  9. Any other existing loan(s)