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RBI will also inject liquidity which will be 0.5% of the GDP out of which Rs.50,000 crore will be reserved for the second phase of TLTRO, and additional refinancing of Rs.50,000 crore by NABARD, SIDBI, and SHB.
Business loan benefits vary across different lenders and loan schemes. Some of the common Business loan features ones are listed below:
Short- and Long-term, Working Capital, Secured and Unsecured Loans
Up to Rs. 1 crore (collateral-free loans), can exceed as per business requirements
From 12 months to 5 years
Check and Compare from available business loan options
The following are the best home loan interest rates available:
|
Lender
|
Interest Rate
|
Loan Amount
|
Loan Tenure
|
|---|---|---|---|
|
HDFC Bank Limited |
16.00% to 22.00%
|
Up to 75 Lac
|
1-3 Yr
|
|
ICICI Bank limited
|
16.00% to 22.00%
|
Up to 75 Lac
|
1-3 Yr
|
|
AXIS Bank Limited
|
16.00% to 22.00%
|
Up to 75 Lac
|
1-3 Yr
|
|
YES Bank
|
18.00% to 22.00%
|
Up to 50 Lac
|
1-3 Yr
|
|
INDUSIND Bank
|
Depends on the applicant’s profile & business requirements
|
Min. Rs. 10 lakh & Max. Rs. 50 lakh
|
From 12 months – 36 months
|
|
IDFC FIRST Bank
|
16.00% to 22.00%
|
Up to 1 CR
|
1-3 Yr
|
|
Kotak Mahindra Bank Limited
|
16.00% to 22.00%
|
Up to 1 CR
|
1-3 Yr
|
|
Standard Chartered Bank
|
17.25% p.a. onwards
|
Up to Rs. 75 lakh
|
Maximum up to 60 months
|
|
Tata Capital Limited
|
17.00% to 22.00%
|
Up to 75 Lac
|
1-3 Yr
|
|
Aditya Birla Finance Limited
|
18.00% to 22.00%
|
Up to 1 CR
|
1-3 Yr
|
|
Bajaj Finserv Limited
|
17.00% to 22.00%
|
Up to 45 Lac
|
1-3 Yr
|
|
Fullerton India Credit Co. Ltd
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
DEUTSCHE Bank
|
24% per annum
|
Minimum Rs. 10 lakh and maximum up to Rs. 50 lakh
|
From 12 months to 36 months
|
|
RATNAKAR BANK LTD
|
19% onwards
|
Min. Rs. 10 lakh & Max. up to Rs. 35 lakh
|
From 12 months to 36 months
|
|
Induslnd Bank Limited
|
16.00% to 22.00%
|
Up to 1 CR
|
1-3 Yr
|
|
Deustche Bank
|
16.00% to 22.00%
|
Up to 75 Lac
|
1-3 Yr
|
|
Federal Bank Limited
|
18.00% to 22.00%
|
Up to 50 Lac
|
1-3 Yr
|
|
Cholamandalam Investment & Finance Co. Ltd
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
L&T Finance Limited
|
17.00% to 22.00%
|
Up to 75 Lac
|
1-3 Yr
|
|
Godrej Capital Limited
|
17.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Hero Fincrop
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Ashv Finance
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Poonawalla Fincorp Limited
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Clix Capital
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Edelwise
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Ambit
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Neogrowth
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Unity
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
SME
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
Inditrade
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
|
IIFL Finance
|
18.00% to 22.00%
|
Up to 35 Lac
|
1-3 Yr
|
To avail a business loan from a lender, you will need to check if you meet the eligibility criteria listed by the lender. Listed below are the general eligibility criteria to avail business loans:
STEP 1: You can apply for a business loan through online or offline channels. A number of lenders, today, give prospective customers the option of directly applying for a business loan through their official websites. To apply for a business loan online, you will need to visit the lender’s respective website, click on the loan product that you wish to apply for, and click on ‘Apply Now’.
STEP 2:Â Upon doing so, you will be redirected to another webpage, wherein you will be required to key in certain details into an online application form. You may be asked to enter your name, age, contact number, city of residence, details about your business, etc.
STEP 3: Once you key in the required information, you can click on ‘Submit’ to submit the online application form. A representative from the bank/financial institution will contact you to take the loan application process forward.
STEP 4:Â You can also choose to visit the nearest branch of a bank or financial institution and directly apply for a loan through the branch. In this case, you will need to submit the loan application form along with the required supporting documents at the branch.
STEP 5:Â Once the lender verifies your loan application and documents, your application will be approved, after which the loan amount will be disbursed into your account.
There are multiple reasons for applying for a business loan. However, you should opt for this scheme only when:
If an entrepreneur has a business idea that he or she wants to turn into an endeavour with potential income, a business loan can be availed in such a scenario to meet his or her financial needs. However, in order to ensure your loan gets approved, you should make sure that your idea is good enough to generate substantial profits in order to repay the loan interest. You should also make sure that the overhead cost of the business is not high enough to cause a negative impact on the business and its profitability.
Opting for a business loan is a great way to arrange for the funds required during the expansion of an organisation. Business expansion can include starting a new department, launch of a new product, upgrading an operation or product, venturing a new area or market, etc. Additionally, the chances of loan approval for an existing business are usually high owing to the fact that it holds a proven track record.
When dealing with a high-demand product, it is essential for the business to maintain a regular supply to the market. In order to do this, the organisation might have to increase production by investing in equipment and machinery with the latest technology. Furthermore, a company might also need to buy equipment during an expansion. Business loans are a great way to meet credit needs during such a situation.
It is difficult for small companies to ensure there is a healthy amount of cash flow within the organisation. Therefore, a business might face a shortage of money to fulfil its liquidity requirements for a working capital such as utility bills, overhead salary, inventory management, rent, etc. However, this problem can be solved if a business owner opts for a loan to meet the company’s temporary financial crisis.
When the cash flow is low within an organisation due to reasons such as market boom and increase in operating cycles, it is difficult to manage regular expenses such as salaries, supplies, and raw materials. In order to keep the business running and to recover from such a financial crisis, an entrepreneur might decide to avail a business loan and keep the business operational.
A business loan can also be availed to receive the funds required in order to make a business that has been incurring losses profitable. Even though many lenders are sceptical when funding a less successful/unsuccessful business, corporate applicants with a practical plan that includes major changes in business operations or introduction of a new product might convince them to do so.
It is always a smart move to repay multiple small debts using a large loan in order to avoid paying a huge amount of money as interest. A businessman can also choose to do the same by availing a business loan.
If you are operating a business that is in demand only during a certain time of the year then it might be difficult for you to manage the expenses when the orders start rushing in. In that case, you can secure a short-term business loan to offer undisrupted service to your customers and can repay the loan using the profit earned after the peak season is over.
A few types of business loans are as follows:
In an overdraft facility, the business owner can withdraw a larger sum than the amount present in the account as a loan to meet his or her business needs. The maximum amount that can be withdrawn and the interest rate under this facility is based on a mutual agreement between the lender and borrower.
In case of a term loan, a borrower can avail a secured or unsecured loan to receive the funds according to the situation and requirement of the business. These loans are helpful in acquiring long-term assets. There are three types of term loans based on tenure namely short-term loan, long-term loan, and intermediate loan that can be repaid on a monthly or quarterly basis. While the rate of interest for such loans can be fixed or floating, it varies according to the loan repayment tenure.
When an entrepreneur withdraws a demand loan to meet the financial requirements of his or her business, the amount has to be repaid whenever the bank or non-banking financing company (NBFC) recalls it. Demand loans can be both secured and unsecured and are ideal to meet a short-term financial crisis. While the maximum term for this type of a business loan can be 12 months, the merchant can choose to renew it when the term has ended.
At the time of a financial crisis, a business can also decide to opt for a loan against its financial securities that are approved by the bank such as mutual funds, fixed maturity plans, insurance policies, savings bonds, demat shares, exchange-traded funds, etc.
This type of financing scheme can be availed by a business based on the creditworthiness of the buyer’s bank when the buyer and the seller do not know each other such as during international trade transactions. In this case, the bank pledges on-time payment to the seller after taking account of its origin certificate, insurance certificate, transportation documents, legal documents, and other commercial documents. However, if the buyer fails to make the payment, the bank is liable to pay the entire outstanding amount.
The cash credit facility is an overdraft loan that can be availed by a business to finance its need for working capital by offering its current assets such as receivables, inventory, etc. as collateral. The maximum amount that can be withdrawn using this scheme is dependent on the stock margin fixed by the bank. The tenure of this loan can be renewed at regular intervals of 12 months.
Whether you own a public/private limited company or proprietorship/partnership firm, you can avail this pre-approved secured loan by offering residential, commercial, or industrial property as collateral. This financing scheme helps companies secure down loans, buy the required equipment, or cover any additional costs that will help the organisation grow. In this kind of a business loan, the financing company promises to pay the stakeholders of the guaranteed business in case it defaults.
In a bid to promote women empowerment, numerous banks and NBFCs offer special loan schemes to existing and potential women entrepreneurs. These exclusive schemes offer a lot of benefits and special discounts in terms of quantum of loan, interest rate, security, etc. Furthermore, female entrepreneurs can also benefit from the consulting, training, and counselling offered by several lenders to help them learn about various aspects of the market and industry. However, these loans are only available to women who hold more than 50% shares of a company.
• MahilaUdyamNidhi Scheme
• MahilaSamridhiYojana
• Cent Kalyani from Central Bank of India
• Stree Shakti Package from State Bank of India
• Shringaar and Annapurna from BhartiyaMahila Bank
• Dena Shakti Scheme from Dena Bank
• Udyogini Scheme
Through a Point of Sale loan, also called a Merchant Cash Advance, merchants can offer funding and financial assistance to their customers buying from their shops. Business owners, enterprises, MSMEs, entrepreneurs, retailers can avail this type of Loan against POS machines, to start a new business or manage their existing businesses. The loan amount depends on the volume of business generated at the said POS.
This is a method of buying goods through a bill of credit, for sellers of goods. It is a source of working capital, where the lender or financial institute takes discount from the seller’s customers. The bills that come under this discount are termed as ‘bills of exchange’.
This scheme was started by the government of India to extend support towards start up enterprises for growth and expansion purposes. To avail this, an enterprise needs to obtain a recognition certificate from the Start Up India mobile app/portal. This scheme also aims to create wealth and employment by financially backing entrepreneurs.
Under this loan scheme started by the government of India, every bank branch can help set up the business of at least one SC/ST or woman entrepreneur per branch, with the loan amount ranging between Rs. 10 lakhs to 1 crore. This aims to help the backward class and women.
The Micro Units Development and Refinance Agency (MUDRA) loan is meant to support MSMEs nationwide, with a minimum loan amount of Rs. 50,000 and maximum of 10 lakhs. Under the PradhanMantri MUDRA Yojana, this loan is to extend support to non-agricultural and small first time entrepreneurs or existing businesses and non-corporate enterprises. It has three categories, namely, Shishu, Kishore & Tarun wherein these loans are offered by Private Sector Banks, Public Sector Banks, Regional Rural Banks (RRBs).
A working capital loan is meant to take care of the day to day undertakings of a business, like raw material purchase, salary payments, rents, training, etc.
Before you choose to apply for a business loan to start a new business or expand the current one, you should learn about the features of a business loan.
Listed below are a few points that you should consider before availing a business loan:
LISTED BELOW ARE A FEW POINTS THAT YOU SHOULD CONSIDER BEFORE AVAILING A BUSINESS LOAN :Â The quantum of loan offered by lenders to business owners/self-employed individuals is usually quite high. That said, it is necessary to assess your funding requirements and avail a loan that will help you fund your business requirements. It is best to not borrow more than what you require since the repayment may become a hassle.
RESEARCH THE TYPES OF BUSINESS LOANS :Many lenders offer more than one business loan as part of their product mix. These loans are likely to have varied terms, loan amounts, loan tenures, and repayment options. Further, select business loans may be specially catered towards certain sectors or segments of the society, thus helping individuals belonging to these groups avail either a lower interest or better terms. Hence make sure to do your due research about the various types of business loans that are available in the Indian market and make a choice accordingly.
CHECK YOUR CREDIT SCORE :Â Your credit score indicates your creditworthiness. Individuals with a good credit score are considered less likely to default on their repayment. Lenders, thus, usually check your credit score before approving it. To increase your chances of being approved for the loan at an affordable interest rate, it is advisable to have a credit score above 750. Before applying for a business loan, make sure to check your credit score and take the necessary steps to improve your credit score, if necessary.
UNDERSTAND THE REPAYMENT TERMS : For business loans, the borrowed amount is, in most cases, repaid via Equated Monthly Installments (EMIs). Lenders usually take your repayment capacity into account and decide on a loan tenure and monthly EMI that is affordable. As an applicant, you should ensure that you understand your lender’s repayment terms. Make sure to not default on EMI payments since it can cause your credit score to dip.
CHECK THE CHARGES :Â Certain charges that are levied on business loans include the interest rate, processing fee, preclosure fee, documentation charges, part-payment fee, default fee, etc. Make sure to check the charges that are levied by different lenders and understand how they affect the cost of your loan.
If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.
A business loan is an unsecured loan that can be availed by an applicant to cover the day to day costs of business. It does not usually require any collaterals and comes with a flexible repayment tenure, that can be anywhere between 12 months and 5 years, depending on the loan amount.
Depending on the lender, the processing fee for a business loan could vary from zero to 4% of the loan amount, subject to loan requirements.
A credit score of close to 900 is considered great by lenders, as far as business loans are concerned.
The maximum business loan amount that a lender can approve could go up to Rs. 1 crore.
For short term business loans, with a relatively lower amount, the loan tenure does not exceed 12 months. However, for business loans of higher amounts, a suitable tenure can be chosen, with the maximum being 5 years.
Yes, a credit score of 750 is considered quite good by lenders, who might even allow the applicant a lower interest rate.
Lenders often offer lower interest rates to applicants with a high credit scores, so the higher the score, the better. Consequently, applicants might have to pay higher interests with a lower credit score.
Lenders often look for a credit score of 750 or more, since that means the applicant has a great repayment track record. However, many lenders might still loan to applicants with lower credit scores, but for a high interest rate.
It is important that one compares all the options available, and compares the benefits and interests for each. Whichever option has the best benefits should be chosen by one, irrespective of whether it is from the Dealer or a bank.
Several banks like HDFC, ICICI and SBI offers loans on used cars, provided they are no more than 5 years old. The loan covers up to 85% of the on-road price of the vehicle and has maximum repayment tenure of 7 years or 84 months.
The top most criteria, as mentioned above, is a credit score of 750, to be able to avail a loan from a lender. Higher the credit score of an applicant, higher is his/her chance to get the loan at a low interest rate. The other factors might include net monthly income, employment type, job stability, residence, etc.
The EMI depends on the car loan amount, interest rate and the loan repayment tenure. It can be easily calculated using the EMI Calculator on the SastaLoans24.
While there is nothing set in stone, when it comes to the down payment amount, a higher down payment would mean a smaller loan, lower interest rate and smaller repayment tenure, all of which lead to a smaller debt liability. Subsequently, a higher down payment amount often prompts lenders to charge a lower interest rate, too.
A higher credit score (over 750) would earn one the chance to negotiate a lower rate of interest. Some lenders might even waiver the processing fees partly or wholly, due to a high credit score.
In case of additional fund requirements, some banks (HDFC, Kotak Mahindra, ICICI, Axis) offer top-up loans, which require minimum paper work and has quick disbursal. The applicant is required to maintain a clear repayment record for at least 9 months to be eligible for this. A top up be as much as 150% of the car’s value.
Car refinancing is when one takes a new loan to pay off the outstanding amount of an existing loan amount. This can be done to get avail lower interest rates or longer loan tenure. Usually, it saves money, since the EMI amount reduces. However, if majority of the instalments have already been paid off, refinancing may be a loss since the penalties will overrun the benefits.
As announced in the latest Union Budget (2019-20) by Finance Minister Nirmala Sitharaman, the purchase of an EV or electronic vehicle makes on eligible for a tax rebate of 1.5 lakhs on the interest paid. One will be able to avail a benefit of about Rs.2.5 lakh during the entire term of the loan. Further, the tax rates on electric vehicles to 5% from 12%, by the government of India.
Foreclosing a car loan, or paying it off before the tenure is up will release the vehicle form hypothecation and give ownership to the borrower. It will also lessen the cost burden on the borrower, since he/she will not need to pay EMI’s anymore. Foreclosing is usually allowed by lenders, after minimum 6 months of EMI payments. It might have a penalty attached, which varied from lender to lender.
Leasing a car is similar in that the leasee is required to pay monthly instalments to the owner for the lease period, and is ideal for people who like to change vehicles every few years. Leasing takes care of the maintenance Once the lease is up, the leasee can simply return the car to the owner without the extensive hassle of evaluation or sale.
A leased vehicle usually has restrictions in place, as opposed to an owned vehicle. It can only run for a certain distance. Also, there can be no customizations made on leased vehicles.
