A Complete Guide About Business Loan

A business loan is specifically intended for business purposes and it can be in the form of secured or unsecured loans. For a secured business loan, the borrower has to provide collateral security in the form of residential or commercial property, pledge assets such as equipment, stock or vehicles against the debt. If the debt is not repaid, the lender may claim the secured asset. Unsecured loans do not have collateral, though the lender will have a general claim on the borrower’s assets if repayment is not made. 

The interest rates of business loan in India vary from lender to lender and the borrower must have a good credit history to avail a better rate of interest. Websites of banks and private lenders have a business loan calculator which can be used to calculate Equated Monthly Installments (EMIs) and the interest rate on the business loan. 

The eligibility criteria set by different lenders for business loans take into consideration the minimum turnover of the company, the last three years ITR, the ownership of house or business premises and tenure of business operations. In addition to this, the documents required to check the eligibility of the borrower include PAN card, Aadhaar card, last one-year bank statements, address proof of the business establishment and address proof of residence of the business owner.   

Must Read: Steps To Get A Small Business Loan