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Business Loan

What is business loan?

Businesses require an adequate amount of capital to fund start-up expenses or pay for expansions. As such, companies take out business loans to gain the financial assistance they need. A business loan is debt that the company is obligated to repay according to the loan’s terms and conditions.

Banks give you money to run your business, which you have to repay with interest, called a business loan.

Your business loan can be secured (you give a collateral) such as your Company inventory, land or machinery and avail your loan at a lower rate of interest.

Your business loan can be unsecured (you do not need to give a collateral).You are charged a higher rate of interest.

Why Business loan:

Flexibility 
Owners may avail different types of loans depending on their fund requirements. Companies may choose term loans to meet the fund requirements in the short to long term. Alternatively, they may opt for working capital loans to meet the operational expenses of the business.

Convenient Repayment Options 
The promoters are offered different repayment options as per their convenience. They may work out a repayment plan as per the business cash flows to avoid facing financial difficulties while servicing the loan.

Affordable Costs 
Contrary to popular belief, the business loan rates are not exorbitant. These are determined based on several criteria, such as tenure, the financial situation of the business, market dynamics and the borrowers’ credentials.

Easy to Avail 
Several leading institutions like Tata Capital offer loans to businesses without a guarantor or collateral. This makes it easier for small business owners to access funds to meet their cash flow requirements and sustain their ventures.

Sustain and Grow Business 
Companies are able to meet the funding needs to efficiently manage their operations as per the business cycle. Moreover, businesses in the expansion mode are able to use the borrowed amount in different ways to move up in the value chain.

Documents Required for business loan in India: 

All the relevant information related to documents required for business loans.

  1. ID Proof: Papers as proof of identity like Passport, Pan card, Voters ID Card and Driving License.
  2. Address Proof
  3. Proof of Continuity Of Business
  4. Bank Statement 6 Months
  5. Board Resolution (If pvt ltd co. is co-borrower/Partnership Authorization Letter {if partnership firm is co-borrower}
  6. ITR & Statement Of Computation of Income – for last 2 Years
  7. CA Certified or Audited P/L Acc Statement and for >40 Lacs cases Audit report along with schedules of P&L and Balance Sheet – for last 2 years
  8. Latest ITR of Co-Applicants – For last 2 Years
  9. Ownership Proof of Residence or Office

Eligiibility:

Self Employed (Private Ltd. Co. and Partnership Firms)

 include Private Companies and Partnership firms in the Business of Manufacturing, Trading or Services.

Eligibility Criteria:

  • Minimum Turnover of Rs. 40 Lakhs.
  • Years in business: Minimum of 3 years in current business and 5 years total business experience
  • Business must be profit making for the last 2 years
  • Minimum Annual Income (ITR): Rs. 1.5 Lakhs p.a.

Documents required:

  • PAN Card
  • Address Proof (Ration card Tel/ Electricity Bill/ Lease agreement/ Passport/Trade license /Sales Tax certificate)
  • Bank Statement (latest 6 months bank)
  • Last 2 Years ITRs (computation of income) Balance Sheet and Profit & Loss a/c. Audited or Certified by a CA
  • Proof of continuation (ITR/ Trade license /Establishment /Sales Tax certificate)
  • Sole Proprietor Declaration or Certified Copy of Partnership Deed, Certified true copy of Memorandum & Articles of Association & Board resolution (Original)

Self Employed (Individuals).

 include – Sole proprietors, Partners & Directors

Eligibility Criteria

  • Minimum age of Applicant: 21 years
  • Maximum age of Applicant at loan maturity: 65 years
  • Years in business: Minimum of 3 years in current business and 5 years total business experience
  • Minimum Annual Income (ITR): Rs. 1.5 Lakhs p.a.

Documents required:

  • Proof of Identity (Passport / Voters ID card/ Driving License/PAN Card)
  • Address Proof (Ration card Tel/elect. Bill/ Lease agreement/ Passport/ Trade license /Sales Tax certificate)
  • Bank Statement (latest 6 months)
  • Latest ITR along with computation of income, Balance Sheet & Profit & Loss a/c for the last 2 yrs. Audited or Certified by a CA
  • Proof of continuation (ITR/Trade license /Establishment /Sales Tax certificate)
  • Other Mandatory Documents (Sole Prop. Declaration Or Certified Copy of Partnership Deed, Certified true copy of Memorandum & Articles of Association (certified by Director) & Board resolution (Original)

For More Information:


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