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Business Loan

What is a Business Loan?

There comes a time in every business when there is a need for extra credit and funds for its smooth functioning. These funds help you, the business owner, to expand, invest and help in your working capital needs. At times like these, a quick business loan is the best financial aid that can help you grow.

This borrowed capital can be applied towards daily capital expenses, for specific project funding, expansion of the business including purchasing of new machinery for the business. You can also apply to take a loan for business if you need investment for starting a new business or ancillary units for your existing business.

Here’s a list of the basic documentation you will need to submit:

  • Application form
  • Company bank statements for six months
  • Income Tax Returns for 2 years
  • Balance sheet and P&L accounts for 2 years
  • KYC documents of the company including PAN Card, Registration of Incorporation, Partnership deed, Memorandum & Articles of Association.
  • KYC documents of the owners
  • A report as to how the business loan intends to be utilised

What are the documents you need?

To avail a business loan, you will need the following documents:

  • Complete KYC of the company
  • KYC documents of the owners, partners, shareholders,
  • Audited balance sheet and profit & loss account for 2 years
  • Income Tax Returns for 2 year
  • Certified bank statements for six months

Business loan eligibility criteria are simple and aimed at small and medium sized companies. We have categorized the businesses into self employed and self employed professionals.

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The eligibility criteria are as follows:

  • Aged between 25 and 65 years
  • Profitable business for three years
  • At least Rs 40 lakhs turnover per year
  • Growing turnover
  • ITR for at least Rs 3 lakhs
  • CA audited financials
  • Business Loan amount up to Rs 50 lakhs
  • Loan for business – period up to 3 years
  • Any form of ownership

The documents required for availing business loan are basic and include:

  • Application form with passport-sized photographs
  • KYC documents
  • ITR returns for two years
  • Audited P/L statement and balance sheet for two years
  • 6-month bank certified bank statement
  • Business Ownership documents
  • Proof of business loan documents issued by statutory authorities
  • Trade licenses
  • Any other document as required by law

You can use the Business Loan EMI calculator to decide on the EMI you are comfortable to accept. The EMI calculator seeks three parameters from you which are

  • The loan amount
  • The interest rate
  • The tenure of the loan

You input these values into the calculator and it will tell you the EMI payable. You can iterate by changing the values. Each iteration results in values depicting

  • Exact EMI payable
  • Interest payable for the period of the loan
  • Total amount payable inclusive of principal and interest

Benefits of Business Loan:

You can use a Business Loan to:

  • Increase your business cash flow

  • Lease bigger office premises

  • Renovate your office

  • Purchase, lease or repair machinery and equipment

  • Upgrade to the latest technology

  • Stock up on inventory

  • Hire seasonal employees

  • Purchase raw material for bulk orders

  • Expand to another area or city

  • Scale up operations and take on bigger projects and much more

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