Business loan are the main unsecured lending form intended to satisfy business owners’ or companies’ daily business requirements. No pressure shall be put on creditors to present collaterals or collateral for the use of unsecured corporate loans. Corporate loans can be used for company growth, cash flow control, equipment/computer procurement, workers on hire/trains, raw material purchase, inventory updates, and many more. There are no nominal financing conditions for loans, while consumers can use versatile and tailored repayment plans for collateral-free commercial loans of up to Rs 1 crore.
How does it work?
If you take a loan from a bank or company for a new enterprise, you collect the lump sum, which you have to pay, at a rate that could be set or floating, in a fixed period, in the form of EMIs. There are no minimum loan conditions and, depending on the company requirements, the maximum loan sum can rise to Rs 1 crore. The refund cycle extends from 12 months to 5 years. In some instances, the repayment tenure may exceed in compliance with the lender’s absolute discretion.
Key Features of a business loan
- Interest Rate as low as 11.25% onward
- Nature: Short Term/Long Term, Working Capital, Secured & Unsecured Loans
- No limit as you can borrow any amount
- The maximum amount is Rs 1 Crore but can be extended as per requirements
- Repayment Period: 12 months to 60 Months
Eligibility Criteria
- Age: Minimum 18 years at the time of signing up & less than 65 years at the time of maturity
- Indian Citizen but shouldn’t have any criminal background
- You should have a good credit standing with no defaults in the past
- The corresponding financial institution determines fees and expenses, profits, market turnover, operating experience, antique business, credit score, and profitability criteria.
Who Can Avail a Business Loan?
- Individuals
- Start-ups
- MSMEs
- Manufacturers & Traders
- Private & Public Limited Companies
- Limited Companies
- Sole Proprietorship Firms, Partnerships, Limited Liability Partnerships & Large Enterprises
- Self-employed individuals / Professionals – CAs, Doctors, Architects, Company Secretaries, Allopathic Doctors & Surgeons, etc.
I’ve recently started my business. What are the eligibility criteria?
You may have recently started your business still you may qualify to get a business loan. However, the approval is the sole discretion of the lending institution.
If you’re a salaried
- Age Criteria: Minimum 18 years and but less than 65 years
- Indian Citizen with no criminal records
- An applicant with no previous loan defaults with any bank
- Salaried Applicant must provide below-mentioned documents at the time of loan application along with KYC documents of Applicant and co-applicant or partners:
- Minimum monthly salary: As per the bank’s discretion
- Last six months’ salary slips
- Last one-year ITR
- Your office identity card
- Your appointment & offer letter from the current employer
For self-employed
- Age Criteria: Minimum 21 years and Maximum 65 years
- Business existence for at least one year
- Minimum Annual Turnover: Depends on the lender
- Indian Citizen with no criminal records
- An applicant with no previous loan defaults with any bank
- Salaried Applicant must provide below-mentioned documents at the time of loan application along with KYC documents of Applicant and co-applicant or partners:
- Last 12 months’ bank statement
- Last one-year ITR, GST returns, and Sales Tax statement
- The last 1-year P&L statement – All documents to be audited by CA
- Copy of Registrations, Licenses, and Permissions
How to apply for a business loan at Fair Fincorp
Applying for a business loan at Fair Fincorp is not less than a cakewalk.
- You contact Fair Fincorp Support Ambassador @+91 989 766 6966
- You furnish basic information to the support ambassador
- Our certified experts analyze, compare, and help you select the best available option
- You upload documents on the lender’s portal or schedule a pickup
- The lender initiates the verifications & background checks
- Post successful verification, your lender disburses the funds into your account
Documents Required for Business Loan
- Applicant’s recent passport-sized photographs
- Identity Proof – PAN card, Aadhaar card, Valid passport, Voter’s ID card, Driving License.
- Address Proof – Voter’s ID card, Aadhar Card, Passport, Driving License, Utility bill, Water Bill, Electricity Bill
- Business Address Proof
- Proof of business existence for the last three years
- Last 6 months’ bank statement
- Previous three years’ Income Tax Return (ITR)
- Balance sheet and Profit & Loss account statement
- Financial documents audited/attested/signed by Certified CA
- Copy of Trade License
- Sales Tax Certificate
- Certified Copy of Partnership Deed
- GST Registration Certificate
- Proof of ownership of the possessions you use for business activities
Why do I need a business loan?
You need a business loan if:
- You want to expand your business or relocate somewhere else
- To complete working capital needs
- You want to enhance the cash flow in the business
- You need to buy raw materials, machinery & equipment
- Keep your inventory stocked up
- You want to purchase land or building for business operation
- Upgrade current projects or want to introduce a new project
- Want to do renovation
Type of Business loan
Term Loan
Many kinds of term loans, such as short-term loans, long-term loans, and other small business loans, are currently eligible. A contractor will make use of these loans based on his/her needs and economy. The loan tenure is mainly 12 months for a short period loan and up to 5 years for a long-term loan.
Term lending is split into two sections, uninsured company lending, and protected company lending. The collateral or the defense will in secured loans be a particular asset, equipment, or company, and usually have lower interest rates than the unsecured. Most corporate loans are unsecured loans, and no collateral or securities are needed to be offered to banks and NBFCs.
Working Capital Loan
To satisfy companies’ everyday financial needs working capital loans and even small business loans are used. Regular expenses of businesses include payment of employees, purchasing raw materials, payment of rent, preparation for companies, etc.
Mudra Loan Under PMMY
Loans issued to micro, small, and medium-sized enterprises (MSMEs) by most of the country’s leading banks include Micro Growth and Refinance Agency (MUDRA). Pradhan Mantri MUDRA Yojana accounts for the start-Up of the company or SME unit loans of at least Rs. 50,000, and a limit of Rs. 10 lacs. The government is working to ensure that first-time entrepreneurs or established business owners get sufficient financing through the Yojana Mudra Loan.
PMMY is a schema set up by the Indian government to give funds to Rs 10 lacs. Mudra loans are classified into three groups called Shishu, Kishore & Tarun. Private sector banks, public sector banks, regional rural banking institutions (RRBs), and so on provide such loans. This system also allows for small business loans.
Business Loan for Self-Entrepreneurs
It’s the most common group of all since vast volumes of loans are taken by self-employed entrepreneurs. The loan sum will vary from a minimum of 50,000 rs. to up to 10 crores. The offered interest rate depends on the applicant’s financial records and is determined at their discretion by the lenders.
Business Loan for Stand-Up India
India’s government introduced the Stand-up India scheme to help individuals in the SC/ST class and female entrepreneurs. The project’s fundamental goal is to provide banks for at least one SC/ST borrower and at least one female entrepreneur per branch to provide credit between Rs 10 lacs and Rs 1 Crore.
Overdraft Loan
An overdraft means the money is overdrawn from your current/savings account. Simpler terms are used to obtain more revenue from the account holder. If the overdrawn balance falls under the terms of a prior arrangement, a negotiated interest rate would be paid.
