Business Loan

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Business Loan

What is business loan:-

A business loan is a kind of financing you can avail for the urgent needs of your growing business. When someone takes a loan for business purposes like for the development of the business or starting a new business then it is a business loan. After some period of time business owner have to pay back the borrowed amount with interest charges.

Types of business loan:-

Fund based loan:-

A fund based financial service involves credit offered by banks in the form of loans, overdrafts and other cash transactions

  • Term loan
  • Project financing loan
  • Working capital loan

Term loan: –

The term loan is a short term loan. These types of loans run for a short period of time like 6 months to 12 months. The term loan is usually taken for equipment purchase, small business development or purchase any land or building, etc. these types of loans are easy to get because their amount and tenure are flexible.

Project financing loan:

Project financing loan is a long term loan. In this loan, the amount is used for the project is paid back from the earning of the project.

Working capital loan:-

The working capital loan is also a short term loan. This loan is to take care of the company’s everyday operations. Some company doesn’t have predictable or steady earning all over the year, so this loan work as a helper for them.

Non-fund based loan:-

In non-fund based lending, the bank does not give the funds but they only gives assurance. The “letter of credit” and “bank guarantees” is the category of non-funding loans. The non-funding loan can be converted into a fund-based advance if the client fails to fulfill the term of the contract.

  • Letter of credit
  • Bank guarantee

Letter of credit:-

A letter of credit is a document of guarantee given to the seller by the bank which states that the payment will be on time with the correct amount. In case of buyer fail to pay to the seller then the bank will do it if the seller meets all the criteria. The Letter of credit not only gives the guarantee to the seller it also gives the guarantee to the buyer which states that the delivery of the goods will be on time and if the buyer doesn’t receive the goods then the bank will pay back the amount to the buyer.

Bank guarantee:-

Bank guarantee is guarantee given by the bank which states that if the debtor fails to pay the amount then the bank will pay it. The bank guarantees specially used in real estate contracts and infrastructure projects. Most of the people think that the letter of credit and bank guarantee are the same things but they are not.

Other types of loan

Loans against property:-

The loan against property is a type of loan which you have to put the residential or commercial property as collateral. The loan against property is secured loan. The loans against property can be used for business purposes or personal purposes.

Loan Against Financial Shares and Securities:-

In this type of loan you can get a loan for business against Demat shares, mutual funds, insurance policies, Fixed Maturity Plans or Exchange Traded Funds.

How to Apply for Business Loan?

There are two ways to apply for a business loan online and offline. You can choose which one you prefer according to your comfort. However, the online one is more convenient in comparison to offline.

Online:-

  1. First of all, you should decide how much money you need, and you can payback.
  2. Compare different types of business loan and banks offers on https://www.bankagent.in/
  3. Go to the https://www.bankagent.in/ and fill the form or you can go to the bank website by which you want to take a loan
  4. Submit all document which is asked
  5. After completing all these process our agent will contact you
  6. If you full fill all the criteria which is required and your document is verified you will get approved.

Offline:-

  1. as the online process, in the offline process too, the first step should decide how much money you need, and you can payback.
  2. Compare different types of business loan and banks offers on https://www.bankagent.in/
  3. Go to the bank branch by which you decided to take a loan
  4. Fill the form with the all correct information
  5. Submit the form along with documents which are required.
  6. After verifying your all information and documents the bank will approve you for the loan.

Documents Required for Applying for Business Loan:-

  1. Identity proof:- Anyone from Aadhar card/ PAN card/ Passport/ Voter id.
  2. Residential proof:- Anyone from Electricity bill/ Telephone Bill/ Lease agreement/ trade license
  3. Financial Documents:- Statement from the bank, Audited financials for the past three years, Latest Income Tax Certificate
  4. Business Ownership Proof:- Sole Proprietorship Declaration.

Advantage of business loan:-

  • If you get money for the business from the investor you have to share your profit with the investor but in the business loan the profit will be all yours.
  • Bank will never interfere with how their money is spending but if you find an investor you have to work according to them.
  • A Business loan is easy to access.

 

Top banks which provide business loan:-

Banks Loan amount Tenure Interest rate Fee and charges
Axis Bank 50,000 t0 50 lakh 12 month to 15 year 15.50% to 24.00% (per annum) Up to 2% + GST
Bajaj Finserv 1 lakh to lakh 1 month to 8 year 18% – 40% (per annum) Up to 3% + GST
HDFC Bank 50,000 to 5 lakh 1 year to 4 year 15.65 to 21.20 (per annum) Up to 2.50% + GST
ICICI Bank 1 lakh to 10 cr 12 months to 5 year 12.9% to 16.65% (per annum) Up to 2% + GST
Kotak Mahindra Bank 3 lakh to 2 cr 12 months to 3 year 16.00 % to 19.99% (per annum) Up to 3% + GST
IndusInd Bank 1 lakh to 15 lakh 12 months to 5 year 10.6%  to 18% (per annum) 0.5% + GST
Standard Chartered Bank 10 lakh to 75 lakh 12 month to 5 year 13.5% – 20% Up to 2% + GST
Tata Capital 5 lakh to Rs.50 lakh 12 months to 36 months 18% (per annum) Up to 2.75%+GST
Yes Bank 20 lakh to 4 cr 12 months to 5 year 13.25%  to 19.99% (per annum) Up to 2.5% + GST
Capital first 10 lakh to 75 lakh 12 months to 5 year 16.00%  to 24.00% (per annum) Up to 2% + GST

 

Things to remember before applying for a business loan:-

  • Before applying for a business loan you should prepare a business plan.
  • Clearly specify the loan purpose and quantity
  • Before applying check your credit score if your credit score is not good there is a chance of being rejected, so maintain the credit score before applying for a business loan.
  • Find out what types of deals different lenders can offer you and use these interest rates and charges to assess your expenses
  • Some types of loans will require some type of collateral. If this is the sort of loan you decide, you’ll need to have good idea of how valuable your collateral is

What is a Prime Minister Employment Generation Programme scheme (pmegp) and pmegp loan detail:-

The Employment Generation Program (PMEGP) of the Prime Minister is a scheme to provide economic support to those who want to establish their own business. Under this system, the recipient has to spend only 5-10 times the price of the project, because the government offers a 15-35 percent design subsidy depending on various requirements. The involved companies provide entrepreneur loans.

Eligibility criteria for pmegp loan:-

  • Applicant must be 18 years old or above
  • Those who want more than 5 lakh for business industries and 10 in the manufacturing sector must have qualified 7th
  • Self Help Groups
  • Charity trust
  • Companies enrolled under the Society Registration Act, 1860
  • Production Co-operative Societies

How to apply for pmegp loan:-

  • Go to the kvic website and apply online application
  • talk to banks who is ready to give loan to your project and submit the letter of communication in the interview which will be conducted by kvic/dic/kvib chosen a nodal agency for your project idea
  • if your project is got selected then your application will be forwarded to the bank
  • after reviewing of application bank will sanction your loan application
  • submit the sanction letter to the kvic/dic/kvib and bank
  • after that you have to get EDP training and submit the EDP training to the kvic/dic/kvib after that your subsidy will be sent to your bank.

Pradhan Mantri rojgar yojana (pmry) loan:-

PMRY (Prime Minister Rozgar Yojana) is a scheme launched by India’s government to provide ten lakh educated unemployed men and females in India with sustainable self-employment possibilities. Under this scheme, the government will provide Rs.1 lakh for business sector Rs.2 lakh for other sectors

How to apply for Pradhan Mantri rojgar yojana online:-

  • Visit the official portal of Prime Minister’s Rozgar Yojana.
  • Download the application form and fill it with complete details.
  • Submit the fully filled form to the respective bank those which come under PMRY scheme and then the concerned bank will get in touch with you.

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