Here the bank would allow the customer to borrow a pre-determined amount(@ pre-agreed interest rate) against your current account.
Available in varying tenures from 3 years to 10-15 years. They can be secured (they hence have a lower interest rate) or unsecured in nature.
You can avail instant cash back on your large purchases or discount on the credit sales from your bank. You need to submit underlying documents like invoices or lading bills.
It is a letter from a buyer's bank guaranteeing that the seller will recive the payment on time and for the correct amount.Typically arises in international trade.
A summary of business loan interest rate in India:
Note: Charges vary from bank to bank. These are only indicative and subject to periodic change.
Often, businesses need funds to purchase raw matrials, buy equipments and machinery, to pay off suppliers and so on. Liquid fund is said to be the life-blood of any business. Without the availablity of this kind of liquidity, a business may find it difficult to operate. Inability to pay suppliers and crditors can lead to loss of reputation of the business in the market. This can also hurt its growth and expansion prospects.
A Business Loan is for commerial lending purpose. This is specifically for funding business needs described above. By nature, it is an unsecured loan, that is, loan is granted without pledging anything against the borrowed amount. The interest rate is fixed and the loan can be paid back over an agreed time along with the interest.
There are various types of business loans, each depends on the kind of business need. Accordingly, banks and NBFC's too have customized loan products to suit business loan requirement. There are specialized loans for women entrepreneurs, for SME and MSME's and loan for business with small capital as well.
One can easily apply online for a business loan by filling up the online application form here at Crefite. A company representative will then contact you with a pre-approved loan offer. You can also apply offline by simply giving us a call at +91 9769691905 and we would help you with rest of the business loan application procedure.
Documents Required: The following documents are required to successfully apply for an SME Loan:
All major private banks and financial institutions like NBFCs provide unsecured loans to businesses across India. Most of these are quick business loans with fast approvals. One other feature is that are generally short-term in nature. So the maximum tenure is up to 5 years. One has to comply with their eligibility criteria and documents to avail the business loan.These are :
You can expect banks to charge the following at the time of processing your business loan application :
1. Loan Processing Charge
2. Stamp duty charge
3. Pre-EMI charges(if any)
In order to get a business loan from a bank in India, you need to meet the following criteria:
Here is the list of documents that needs to be submitted for availing any kind of commercial business loans, SME loan or working capital loan:
Applying for a business loan is different than that of personal loan. Here, one's faces a lot of bank rules and loads of paperwork. We outline for you the steps involved in taking a business loan.
There are different types of business loans like term loans, short term loans, equipment financing, line of credit, invoice financing, merchant cash advances and business credit cards to name just a few. Depending upon your business requirement, the business loan product would also vary. Hence, before applying for a loan, one must be sure to ascertain for what business purpose is the loan required.
Availing business loans calls for adhering to tough banking norms. In order for the bank to approve your loan, you must have proper books of accounts. Particularly, bank would need the following records from you:
Banks may further ask you to furnish your business's current year performance and projected turnover on letterhead of your firm. The bank would be interested in knowing every detail pertaining to the purpose of taking the business loan. For example, the cost projects, the revenue projections, the financial payouts and so on. Apart from this, in some cases you may also have to provide government approvals for power, pollution, fire and safety, building plans along with documentary proofs. If you are buying a machinery or any other asset, you would need to submit, and where it is the case of purchasing a piece of land, it can be the copy of allotment letter/conveyance deed in case of land.
A good credit rating can help banks in approving your business loan application. Not only this, the better is the credit rating, the lesser is the rate of interest that you would have to pay. A credit rating agency does evaluation and risk appraisal of the firm from internal as well as external aspects like financial strength, industry dynamics, competitive position of the entity, operating efficiency, management capability, organization systems, customer profile, creditor track record and evaluation of other such relevant stakeholders. There is every reason for the bank to grant the business loan with confidence is your credit rating is good. In all sense, before you go and apply for that business loan, get yourself credit rated and improve your chances of getting the business loan.
Loan taken for the purpose of business or profession is known as business loan. The nature of business loan in India can be different types. For instance, it may be :
This loan is extended to self employed professionals such as doctors, chartered accountants and lawyers. The loan is approved based on their individual credit history. Loan amount being approved is often subjective and depends on the borrower's business relation with the banks. Many a times, a collateral in the form of land, insurance certificates etc. is taken. These loans are usually long term in nature and have payback tenure of about 5-7 years. The documents that are required for the loan approval include:
Let us now look at the different types of trade loans in India.
A term is provided for acquisition of long-term fixed assets like machinery, building or land. Term loans have a fixed repayment schedule and an interest rate. The rate of interest can be either fixed or floating. Repayment for term loan may be due monthly or quarterly. The tenure for repayment of a term loan in India is anywhere between 2 years to 10 years.
These are generally fixed assets like Land and building, building construction, infrastructure creation, renovation, purchase of equipment, machinery, vehicles.
A minimum margin of 15 – 25 per cent is applicable. Simply put, the actual loan approved is restricted to 85 – 75 per cent of the total expenditure.
Working capital loan are usually provided to businesses to meet their daily cash needs. In this type of a loan like the overdraft facility, interest is charged by the bank only on the utilized amount and not on the entire sanctioned amount. It is generally availed by small and medium scale enterprises for meeting their operating fund requirements.
It is meant for short term or daily cash needs of the firm. For long term capital requirements like purchase of machinery, one may avail term loan instead.
In a working capital loan, the bank sets a limit for the business to take a loan and the amount can be utilized in a specific purpose only, i.e. the working of the business and cannot be utilized in any other purpose. The banks take total control of the order book of the business with its debtors, receivables, cash flow, inventory, etc. The bank also has the right to revoke the loan if the set expectations defined in the loan agreement are not met as per the banking standards and norms.
It is a kind of a working capital loan. Cash credit facility is a kind of short term business loan granted to meet working capital fund requirement. It is approved against the security of stock in trade ,process or against raw materials. Cash credit facility is ideal for financing working capital – inventory and receivables.
Assets that can be financed using cash credit facility are Inventory and receivables such as raw materials, work-in-process, finished goods and stock-in-trade, including stores and spares.
A letter of credit (LC) is type of credit facility wherein the bank guarantees that the seller will receive payment on certain conditions. In the event that the buyer defaults on the payment on the purchase, the bank will cover the outstanding amount. Letter of credit is mainly used in international and domestic trade transactions to ensure that payment will be received where the buyer and seller may not know each other and are based in different countries. The bank in this case acts as the intermediary between the buyer and the seller.
Assets that can be financed using letter of credit are Inventory and capital assets.
Launched in 2015 by the Prime Minister, the PMMY aims to provide formal access of financial facilities to non-corporates, small businesses. specifically for the MSME industry in the non-farm sector. These loans are given by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and NBFCs.
The loans under this scheme is available under three products - Shishu, Kishore and Tarun depending on the stage of growth or development and funding needs of the firm. Shishu generally covers loans up to Rs 50,000, Kishore between Rs.50,000 to Rs.5,00,000 and Tarun covers loans between Rs 5,00,000 and up to Rs. 10,00,000. The loan can be used to but a commercial vehicle, car loan and Two-wheeler loan, loan for working capital requirement, buying plant and machinery, renovating offices etc. Collateral under this scheme is not needed.
This scheme is targeted at entrepreneurs from the Scheduled Caste (SC) or Scheduled Tribe (ST) and Woman borrower to set up a venture (not meant for enterprises which has already started operations). In case of non-individual enterprises, at least 51% of the shareholding and controlling stake should be held by either an SC/ST or a woman entrepreneur.
Banks provide collateral of Credit Guarantee backed loan and can be anything from a commercial vehicle loan to office equipment loan. Loans between Rs 10 lakh to Rs 1 crore are available under this scheme.
The documents that are required for the trade loan approval include: