Types of Business Loans in India

Types of Business Loans in India

Business is never going still and normal. The businessmen have to face many ups and downs in their business. The business sometimes falls or wentz up sometimes. The businessman needs financial help for getting out of the business problems.

Some small businessmen or new business men need money and financial help for growing or taking up their business. They need money to handle all the expenses of their business. The business loans are made for these types of businessmen. The business loan helps the business men to get rid of business problems that come in their business.

BENEFITS OF BUSINESS LOANS

  • Business loans are good for handling your business problems.
  • The most important benefit is that the bank does not care and doesn’t ask the borrower where the money has spent and how it has spent and on whom it has spent, it is up to you how you spend the money.
  • The business loans are very convenient because they could be obtained easily and it doesn’t take time to get them.
  • The business loan helps the business men to buy the business equipment.
  • The salary of the employees can also be given by the business loans.
  • The businessmen can also buy shares of the share market by the business loan.

TYPES OF BUSINESS LOANS

Like the other loans the business loans are also of various kinds. Here we have mentioned the various kinds of business loans.

1. TRADE LOAN:

The trade loan is for the new and small traders. The traders such as Construction, Industrial, Motive Power, and Service traders can apply for this loan for their business. The trade loan is of four types.

  • WORKING CAPITAL LOAN:

The working capital loans are a kind of unsecured loans. This loan usually has a six months repayment tenure. This type of trade loan of business loans is taken by the traders to fulfill the requirements of the business or trade such as buying raw material,equipment,etc and giving salary to the labourers,staff and employees.

  • OVERDRAFT LOAN:

Overdraft loan is given against salary accounts,overdraft accounts,term deposit accounts,savings accounts and even against the house of the borrower. The credit score line of the business account is increased by overdrawing. The company or business man can overdraw the credit score. This loan has a great or higher interest rate.

  • TERM LOAN:

The term loan is cheaper or easier than other loans because it is also given in the exchange of foreign currency and foreign capital and the capital of money cost is cheaper in the foreign or out of India.

  • FACTORING LOAN:

The factoring loans is for the funding or financial institution.  In this type of trading loan the company or institution buys invoice or debit from another company or financial institute. The company has to take the responsibility of returning the invoice amount in quick or less time.

2. PROFESSIONAL LOAN:

Professional loans are for those self employed businessmen such as lawyers,doctors,chartered accountants,etc. The professional loan is like a long term loan, the tenure of this loan could be five to nine years. 

ELIGIBILITY OF BUSINESS LOANS

  • The borrower should belong to a self employed sector,trading,services,partnership or manufacturing firm.
  • The turnover of the business should be at least forty to sixty lakhs.
  • The company or institute should have at least three to five years experience or establishment.
  • The age criteria is twenty one years to sixty five years.
  • The previous two years’ profit rate of the company is asked.
  • The borrower should deposit or give the regular income tax.

APPLY FOR BUSINESS LOANS

  • First visit the bank or website of the bank from where you need to have the loan.
  • Check all the loan schemes and benefits that you can get by the bank.
  • Now get an application form and fill all the information that is asked by you.
  • You should fill in the reason how you want to spend the money.
  • You have to mention the loan amount.
  • You will get different types of lending options for the loan.
  • Submit the application form with the documentations asked by the bank.
  • Wait for the approval from the bank.

DOCUMENTATIONS REQUIRED FOR BUSINESS LOANS

The documents required for the business loan are

  • Like the other loan this loan also needs the identity proof of the borrower.
  • The aadhar card,pan card,passport or driving licence.
  • The address proof is required such as a residential bill of electricity,telephone or water.
  • Address proof of the company of office.
  • The business ownership proof is also required such as Municipal tax bill,agrement bill,etc.
  • Passport sized photograph of the owner.
  • The financial documents such as bank statements of the previous six months,profit,loss and IT returns of at least past two years,etc.
  •  Age proof and age should be above sixty five and below twenty one years.

We hope our content will help you in taking out a loan. And we wish you all the information and answers to your questions.

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