Business Loans are offered to micro, small, and medium enterprises (MSMEs) to support them in their growth stage. These loans are also known as SME Loans and are available for small business owners and entrepreneurs without any collateral.
As MSMEs require ample funds in their growth stage. Hence, banks and Non-Banking Financial Companies (NBFCs) are giving attractive unsecured Business Loan interest rates. These loans can be availed online, and the business loan eligibility are simple to fulfill.
Business Loan Eligibility Criteria
|Age||The borrower should be of 22 years or above at the time of application and should not be more than 65 years old at the time of loan maturity.|
|Business vintage||The borrower must have a business vintage of at least 2 years.|
|Annual turnover||The borrower must have a minimum annual turnover of ₹9 Lakh.|
Documents Required for Business Loans and SME Loans
|KYC documents||PAN card of the Company, Director, Proprietor, and Partners, Aadhaar card/ PassportDirector/Partner/Proprietor PAN Card, Aadhaar Card, Utility bills/ Rent agreement|
|Personal documents||All individual/ Partner/ Director- PAN Card and officially valid documents + Address proof|
|Business documents||Business registration proof and business address proof|
|Business address proof||Utility bills/ rent agreement|
|Financial documents||6 months’ bank account statement|
Types of Business Loans According to the Nature of the Business
As enterprises differ in size, NBFCs and lending institutions have curated special loan offerings to meet every business owner’s unique requirement. These loans can be used to cover various expenses related to business expansion and are available online. Below are some of the different SME Loans for entrepreneurs.
- Business Loan for Working Capital: Every business, regardless of its size, requires adequate working capital to perform its day-to-day operations. Working capital is the difference between your current assets and current liabilities. A business has healthy working capital when it has enough funds to pay off dues without compromising its assets. In case you are falling short of working capital, you can take an SME Loan at attractive unsecured Business Loan interest rates to smoothly run your operations.
- Business Loan for MSMEs: These unsecured loans are fit for enterprises that are in their growth stage. As they are unsecured, business owners don’t have to worry about pledging their company assets as security. Small business owners and entrepreneurs can use these loans to fulfill various business-related requirements. These funds can be used for hiring and training staff, office renovation, maintaining inventory, and investing in marketing to broaden your reach.
- Business Loan for Proprietorship: Sole proprietorship is one of the most well-known forms of business in India. Stores such as independent medical stores, kirana stores, and general utility stores come under sole proprietorship. A Business Loan for Proprietorship can be used for business expansion, hiring staff, maintaining working capital and inventory, and expanding services.
Business Loans are unsecured financial products that can be an ideal choice for entrepreneurs and small business owners. As most lending institutions have gone digital, you can apply for these loans online from the comfort of your home and office.
The online application is easy to access, and the eligibility criteria are simple. You just have to visit your lender’s official website, fill out the loan application form, and wait for a confirmation call. Post that, your loan application will be verified, and the funds will be disbursed into your account instantly.
If you have a high credit score, you can avail unsecured business loans in India at lower interest rates. Your bureau score, or credit score, is one of the most important factors that are considered by lenders to approve your loan application. There are two types of credit scores, personal credit scores, and business credit scores. For businesses that don’t have enough vintage to calculate their creditworthiness, a personal bureau score is used. This is also applicable in the case of a sole proprietorship.
Maintaining a good credit score is crucial for availing of SME Loans. To improve your credit score, ensure that you pay your EMIs on time, have a good credit mix, don’t apply for multiple loans at the same time, and rectify errors in your credit report if any.
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