Best bank for a business loan in India:-
Business loans can be a useful option for those who want to start a new business, grow their current business, or buy new equipment, but don’t have enough money to do so. They are designed to assist small businesses and entrepreneurs in obtaining the necessary funds for various business requirements. With a business loan, you can access additional financing to help you achieve your business goals.
Best Banks for Business Loan in India:-
Purpose of Getting a Business Loan
Different people have different reasons for taking a business loan, let us have a look at the primary reasons-
- To collate credit for future needs
- To buy equipment for Business
- For purchasing more inventories
- For getting new employees to the Business
Types of Business Loan
- Term Loans
- Overdraft facility
- Letter of credit facility
- Demand loans
- Loan against securities
- Business loans for women entrepreneurs
- Cash credit facility
- Bank guarantee
Things to Consider When Applying for a Business Loan:-
Calculate the business requirements:- Before applying for a loan, it’s important to determine how much money you need and only borrow that amount. It can be challenging to repay a loan if you borrow more than you actually need. So, always make sure to calculate your funding requirements before applying for a loan. This will help ensure that you borrow only what you need and can comfortably repay.
Research:- It’s important to conduct thorough research on the different types of business loans available and find the one that best suits your business needs. Make sure to review the repayment options, loan duration, interest rate, EMI (equated monthly installment) options, and other important factors before making a decision. This will help ensure that you select the right loan for your business and can repay it without any difficulty.
Credit Score:- Before applying for a loan, it’s important to check your credit score. Your credit score reflects your creditworthiness and can impact the likelihood of your loan being approved. For instance, having a high credit score, such as a score of 750, can increase the chances of your loan being approved and may allow you to borrow a larger amount. Conversely, a lower credit score can make it more difficult to get a loan approved. Therefore, it’s important to check your credit score and take steps to improve it if necessary before applying for a loan.
Repayment terms:- When you take a loan, you will have to repay it through equated monthly installments (EMIs). It’s important to consider your repayment capacity before selecting the loan tenure and EMI amount. Make sure to choose an EMI amount that you can comfortably afford to repay each month. It’s crucial to avoid missing any EMI payments, as this can negatively impact your credit score. So, always ensure that you have the necessary funds to make your EMI payments on time.
Charges: When you take out a business loan, there are several fees and charges involved, including interest rate, processing fee, default fee, documentation charges, and pre-closure fee. It’s important to carefully examine all of these charges and understand how they affect the overall cost of your loan. This will help you determine whether the loan is affordable and whether it’s the right option for your business needs.
Business Loan Eligibility Criteria:-
|Age Criteria||Min. 18 years and Max. 65 years|
|Eligible Entities||Individuals, SMEs, MSMEs, Sole Proprietorship, Partnership firms, public and private limited companies, limited liability partnerships, retailers, traders, and manufacturers engaged in only services, trading, and manufacturing sectors|
|Business Vintage||Min. 2 years and in profit|
|Business experience||Min. 2 years, business location to remain same|
|Annual Turnover||Min. Rs. 10 lakh and above for existing enterprises|
|CIBIL Score||700 or above|
|Nationality||Indian citizens, should not have defaulted on any previous loan(s)|
|Additional Criteria||Applicant must own either a residence, office, shop, or go down.|
Documents required for applying for a Business Loan
To apply for a business loan, the bank will typically require various documents to verify your eligibility. These documents may include:
- Identity proof, such as a copy of your Aadhaar card, passport, driving license, or voter ID
- PAN card for the company, firm, or individual
- A completed application form with passport-sized photographs
- Proof of residence, such as utility bills from the last three months
- Bank statements from the last six months
- Proof of business stability for self-employed individuals
- Salary slips from the last three months for salaried individuals
- The latest income tax return (ITR) with computation of income, balance sheet, and income and profit and loss account for the last two years. All financial documents must be certified or audited by a chartered accountant (CA).
- Sole proprietorship declaration or certified true copy of memorandum and articles of association of business ownership
- Any other documents that the lender may require.
Best 5 Banks for Business Loans in India
HDFC Bank Business Loan:-
This bank is considered one of the best in India for providing business loans. They offer loans up to Rs.40 lakhs without requiring any collateral, guarantor, or security. Their approval process is easy and fast, and they also offer attractive benefits to their customers.