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.
- Loan balance transfer facility available.
- Pre-payment of the loan is allowed after paying 6 EMIs.
- Interest rates range from 15.00% to 21.20% annually.
- Eligibility can be checked online or at an HDFC Bank branch within seconds.
- The business must have had two profitable years in the past.
- The minimum annual income of the business must be ₹1.5 lakhs as per ITR.
- The repayment period ranges from 12 months to 48 months.
- The minimum loan amount is ₹50,000, and the maximum is ₹5,000,000.
- The minimum tenure period is 1 year, and the maximum is 4 years.
- Individuals must have a minimum of 5 years of business experience, with 3 years in the current business.
This loan is available for business owners, professionals, and self-employed individuals. The minimum loan amount that MSME can take is Rs. 10 lahks, and the maximum is Rs. 52 lakh. A minimum of 40% of the collateral and its interest is combined with the Marginal Cost of Funds based Lending Rate.
To be eligible for this loan, you should have a minimum of 5 years of business existence and a current account at any bank for the last 2 years. Additionally, you should show a minimum average monthly balance of Rs. 1 Lakh. The repayment tenure for this loan is 5 years to 15 years, and the repayment duration of SBI simplified small business loans is up to 60 months.
Apart from the above charges, there may be other charges associated with this loan, which you should check before applying.
ICICI Bank Business Loan
This bank is among the largest private banks in India, and they provide loan options that are tailored to meet the specific business needs of their customers. The loan structure is designed to be user-friendly, making it easy for borrowers to choose an option that works best for them.
ICICI Bank has a simple documentation process that makes it easy to repay the loan. They offer various loan options such as working capital, term loans, or composite loans. Customers can borrow up to ₹2 Crore. The minimum loan amount is Rs. 1 Lakh, and the maximum is Rs. 40 lakhs. The repayment period for the business loan is a maximum of 7 years. Dedicated relationship managers are available to provide comprehensive financial solutions. Customers can also get an overdraft facility under this scheme. To be eligible, customers must provide their last one-year income tax return, audited financials of the last 3 years, current year performance and turnover, and bank statements for the latter 6 months. ICICI Bank offers quick and trouble-free renewals with minimum documentation.
Step by step:
- ICICI Bank has a simple documentation process for business loans.
- They offer different loan options, such as working capital, term loans, or composite loans.
- Customers can borrow up to ₹2 Crore, with a minimum loan amount of Rs. 1 Lakh and a maximum of Rs. 40 lakhs.
- The repayment period for the loan is a maximum of 7 years.
- Customers can get the assistance of dedicated relationship managers to provide comprehensive financial solutions.
- An overdraft facility is also available under this scheme.
- To be eligible, customers must provide various documents such as income tax returns, audited financials of the last 3 years, current year performance and turnover, and bank statements for the latter 6 months.
- ICICI Bank offers quick and trouble-free renewals with minimum documentation.
Axis Bank Business Loan
They provide loans with attractive interest rates and are recognized for their user-friendly services. They offer business loans to professionals such as engineers, doctors, and chartered accountants for funding their practice, acquiring office space, or buying equipment.
- The business must be a partnership, proprietorship, LLP, Pvt. Ltd, Company business.
- You can get a loan from Rs.50000 to a maximum amount of Rs 50 lakhs
- You must be of the age group 21 to 65 years to take a business loan.
- Equitable Mortgage of the goods to be funded by way of payment of title deeds
- A Balance Transfer facility is given with extra finance.
- The bank determines the interest rate based on your business profile, financial assessments, former track record, and tenure.
- For getting the business loan from Axis Bank it is mandated to have a minimum annual turnover of 30 Lakhs
- It is essential to have a business running experience of a minimum of 3 years
- The repayment period is a maximum of 15 years
Kotak Bank Business Loan
Kotak Bank is a relatively new private bank in India, established in 1985, and currently the fourth largest. Despite being new compared to other banks, it has expanded significantly with over 650 branches throughout the country. Kotak Bank is a reliable option for taking a business loan as they provide competitive rates and clear policies.
The good part is that they have customized offers for corporate & women professionals.
- Manufacturers, self-employed business persons, and service providers can apply for this loan.
- The repayment tenure is 48 months
- Online loan application option is also available
- If the applicant submits all the needed documents, then the bank confirms the business loan within 72 hours.
- The business vintage time must be 3 years.
- ou can avail of a loan starting from ₹3 Lacs to ₹75 Lacs
- They have flexible and easy repayment options
- The lender needs minimal documentation to process this loan
- They provide business loans without collateral