As you all know, since this global disease corona pandemic has come, many people have lost their jobs since then. Due to this, people face a lot of difficulties because it is impossible to do any work without money in today’s time.
In such a situation, if a person thinks to do some new position, then where did he get the money, so to get rid of all these problems, you can start your new business by taking advantage of all these schemes implemented by the government. Today we are going to give you information about business loans. How many types of business loans can be given to which persons? What are the necessary documents and qualifications required to start a business? Let us know Full details in detail…
What is a business loan?
An unemployed person takes a job in the form of a loan by any bank or other financial institution to start a new business is called a business loan. It is because the Bank will first approve the Loan from the Bank after seeing your unique business process.
That is, you will get the Loan from the Bank. For this, you will have to get all the correct verification done. Under this Loan, you cannot fulfil your personal needs, and only this amount has to be invested for your business because the Bank provides the loan amount only after the company’s start. With a business loan, you can fulfil whatever you need in your industry.
There are two types of loans.
- Secured Loan
- Unsecured Loan
Under the secured Loan, the person taking the Loan has to mortgage any property or anything to get the Loan with the Bank. After that, you get the secured Loan. The time to repay the Loan is also more. Apart from this, the interest rate is also meagre.
You still cannot keep anything under unsecured Loan, in this only based on your civil one and your dealings with the Bank like this, and you get the Loan only found on this Loan you need guarantee Whose bank account is inside that Bank, even after that you can get unsecured Loan.
Types of taking a business loan
To take a loan from the Bank, there are types of business loans in it. Let us know for which kind of business loans can be found…
1. Term Loan – Although there are many types of loans, there are types of loans. The first is a term loan; in this short term loan, long term loan or any other small business loan, all of them come under the term loan. The amount given by the Bank under the term loan depends on the applicant’s profile for the business and the amount of Loan he needs for his business.
It has to be paid by the person between 12 months to 5 years. The term loan is also divided into two parts. Unsecured Business Loan and Secure Business Loan Secure business loan has to guarantee any type of business in the Bank and nothing like that for an unsecured loan, but the rate of interest on an unsecured Loan is high and time is significantly less
2. Working Business Loan – Working Business Loan is given to complete the day-to-day tasks of the person such that today you all know that there is a shortage of something or the other in the business, even to meet that deficiency. You can take a working business loan. Apart from this, there are many other things in business, what Loan is taken to increase them, in other works like buying necessary equipment in machines to grow business, buying raw material for industry, apart from paying salary to employees for a business. You can also take this Loan for
3. Loan for Bill Discount – Banks and NBFCs give this Loan for bill discount. It is proof that the money for the goods you sell is received on the date given in it. After this, the Bank gives this receipt to the merchant after deducting some money from the value of the ticket, after which when the buyer is there, he takes the money to the Bank after paying the receipt.
4. Letter of Credit Business Loan – This Loan is often used for international business, whenever you do business for any goods from abroad, Islam is used there, this industry was called international import-export business It also acts as a guarantee of offences and for timely payment by them when a merchant deals with suppliers from other countries and also issues bank letters of credit.
5. Point of Sale Business Loan – Point of Sale Loan to anyone who is a new business person. He gets this Loan based on his business sales record. The record of your new business has to be shown to the Bank, which includes any purchases made on the machine, i.e. which is a debit credit card swipe machine during a few months.
How much money has been bought on it? Based on that, the Bank gives a Loan to the merchant, then from the next month of taking the Loan, when the merchant has to pay his Loan when the card is purchased through the machine. There are many options to repay the Loan. For example, the merchant can pay off the Loan at the end of the month, or the purchase is made through the card swipe machine. By deducting money in some parts from him, one can deposit the instalment of the Bank’s Loan.
6. Overdraft Business Loan – Under an overdraft business loan, the merchant has an overdraft account in the Bank, in which the Bank accepts only a limited amount. Through this account, the person can withdraw money whenever he wants. The most prominent feature of this account is that the amount that you start from this account, after that the balance that remains is charged interest only and not the entire amount, for example, if you have taken an overdraft business loan of ₹ 2 lakh, you have withdrawn ₹ 1 lakh. So your interest will be applicable only on ₹ 1 lakh and not on ₹ 2 lakh.
Interest for a business loan
Different interest rates have been prescribed for all types of loans. There are various categories in business loans, too, depending on the type of Loan you want to take and your business’s interest rate. How much will it take? The annual interest rate for each type of business is 14.99%. The rates of interest fixed by NBFCs in the Bank are as follows-
Kotak Mahindra Starting At 14%
- HDFC Bank Starting At 16%
- Axis Bank up 17%
- From Bajaj Finserv, 17%
- Yes Bank starting at 17%
- Tata Capital Finance up 17%
- From ICICI Bank, 18%
- RBL Bank up 19%
- IDFC Bank by 20%
- HDB Financial Services from 22%
Whatever all these banks fix the rate of interest, the trader has to pay it annually. Apart from this, all these bank rates depend on RBI NBFC MFI.
Importance of credit score for a business loan
Whenever a person takes a loan from the Bank to open a new business, then the approval for the business loan is given to the person based on his credit score, i.e. only after checking his civil score, the bag determines that you Loan should be provided for business, should not be given to the citizens of an ordinary person, it is considered correct above 750. If your credit is less than 650, then you cannot take a loan from the Bank. You can get approval for a loan for business from Small Finance Bank through NBFC.
Loans for business are given by banks and by other finance loan institutions, for which everyone has a different credit score limit. Among them, NBFCs and banks decide the civil protection limit for your business loan. Based on what kind you want to take, your civil investigation is done. That’s why the correct credit score for a business loan depends on the type of Loan you have and the type of Loan the applicant wants to take.
Apart from this, for those who want to open a new business and do not have any credit score, the chances of getting a loan to apply in the Bank are less, the credit of the person to take the maximum Loan to start the business should be correct. If the credit is deficient, you cannot get a loan for business, so to take the Loan, you have to maintain your credit correctly.
Qualifications for a business loan
Whenever you want to open a new business, you are applying for a loan in the Bank. Then the Bank sees that it is necessary to have your happiness qualifications for your business. Only then let’s take a loan to you and know what the capabilities are. Must have…
- The business of the person should have been running for at least 1 year or more.
- The turnover of the business should be 12 lakh rupees for the year.
- The credit score of the individual should be 750 or above.
- And there should not be any default under any old loan in the account of the individual.
Documents Required for Business Loan
Whenever you apply for a loan in any institution or Bank, you have to go through any paperwork. Let’s know what the necessary documents required to take a Loan for business are.
- All KYC certified documents of the person taking Loan for business (Aadhar Card PAN Card Electricity Bill Water Bill Driving License etc.)
- Bank statement for the whole year
- Type of Business Loan (Unsecured Overdraft etc.)
- Business Incorporation
- Any other documents demanded by the Bank
- Required Process Charges for Business Loan
Whenever a person takes a loan for his business, different processing charges and different interest rates are set by all the banks for all of them. Apart from this, all these charges depend on the loan amount of the person whose repayment amount etc.
Special loan facilities for women in business
Today in our country, women are also coming ahead in every field. In such a situation, the government is also encouraging women and running special facilities through banks and many such schemes, through which more and more women can be promoted in these loan schemes. There is also a lot of concession in the rate of interest and security guarantee etc., on the loan amount of women.
In some banks, there are women traders. They also have special departments in which they tell about the schemes of loans and many other business-related. Kinds of advice are also given, and they are also taught. A woman working in a company with a 50% stake cannot get the benefit of special loan schemes.
Various types of schemes and loans run by the government for women are as follows-
- Women’s Enterprise Fund Scheme
- Mahila Samridhi Yojana
- Central Bank of India to St. Kalyani Scheme
- Shringar and Annapurna Scheme by State Bank of India.
- State Bank of India Stree Shakti Package.
- Dena Shakti Yojana by Bank of Baroda.
- Udyogini Scheme
The Government of India gives schemes to promote industries
As you have already told all the people. Today in our country, by the government providing new employment opportunities for all unemployed persons, the government is running many schemes to increase small scale and big industries. Through whom he is working to give loans, let us know which methods are being run by the government.
- Mudra Loan Scheme
- Prime Minister’s Employment Scheme
- Prime Minister Employment Generation Scheme
- Credit Guarantee Fund Trust for Small Businessmen
- PSB Loan
- Stand Up India
- Startup India
- Credit Guarantee Scheme
- Credit Linked Guarantee Subsidy Scheme
- National Small Industries Corporation Subsidy
Benefits of business loan
As you all know that money is needed to start any new business. In the same way, money is also necessary to create it smoothly in business because all expenses depend on money in business. Still, many times such situations come that the person is unable to have his own money, and it takes time to get the payment from the customers. Meaning money gets completely stuck in the market; suddenly, when money is needed for any machinery or any work in the business, what will the businessman do in such a situation?
This problem is very troublesome, and the businessman runs his business smoothly in this problem by taking a business loan, that is why it is very beneficial for people in the industry to take a business loan to increase their business, let us know what the benefits of taking a business loan are. Benefits can be…
Whatever is the need of money through Loans for business, their fulfilment?
- Taking a business loan helps in repaying any previous loan.
- Helps in buying raw material machinery.
- Helps in running the working capital.
- Employees also get help in salary through loans.
- It is also beneficial to take a loan to start a new business or start a new branch of industry.
- Tax exemption is available while filing ITR.
Today, we have told you the benefits of taking a loan, i.e. Loan from the Bank to start a new business, how the bath is taken, and which essential documents are needed for whom. All these things have been explained in detail in it. I hope you have liked this article written by us. If you liked it, then do like to share it, and you can also join our comment section for any other information.
What is a Business Loan?
What are the documents required for availing of a business loan?
Aadhar Card, Pan Card, Photo, etc.
Is it necessary to have a credit score to get a business loan?