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Business Loan

If you own a business, you will need money to run it smoothly. When you run out of money, you might face difficulties to run your business. In these circumstances, a business loan comes in handy. You can also use a business loan to start a new business.

What is a business loan?

A business loan is a type of bank loan which is offered to finance businesses. This loan has to be repaid by a particular date with a specific amount of interest. The rate of interest on the business loan to be offered to the borrower is dependent on a number of factors which include the following:

  1. The creditworthiness of the borrower
  2. The amount of loan
  3. The repayment term or period
  4. The collateral provided against the loan

The credit situation of a borrower is analyzed by the lenders before offering a loan to him. This procedure is known as credit analysis. Lenders use it to gauge the repayment capacity of the borrower.

What is the purpose of taking out a business loan?

A business loan can be secured for different purposes which include but are not limited to the following:

  1. Expansion of an existing business
  2. Compensating a deficit in the operating capital
  3. Designing a new concept or product in a new business
  4. Starting a new business

Business loans are becoming increasingly popular financing options across the world and more and more people are going for business loans since they need capital for their businesses and business loans can satisfy their requirements.

What is the importance of business loans?

Businesses are the backbone of a country’s economy. If the businesses of a nation are performing sluggishly, then it has a negative impact on the economy of that particular country. Business loans help businesses flourish and this positively contributes towards economic growth. In this way, business loans can help the economy of a country thrive.

Running a business is not at all a simple task. One has to face financial setbacks during the entire procedure. A business loan can be a perfect means to bail you out from a credit crunch.

Types of business loans

Given below are the different types of business loans that are available to the business owners:

  1. Term loans
  2. Lines of credit
  3. Equipment loans
  4. Seasonal loans
  5. Factoring
  6. Credit card advances
  7. Agricultural loans

What are the documents that you need to furnish for securing a business loan?

To apply for business loan procedure, you must complete and submit a loan application along with few documents. After review of your credit report and income status, underwriting process is undertaken. After all conditions are satisfied, loan committee gives its final approval. The documents required to furnish are:-
  1. A comprehensive business plan, consisting of an outline of the market and clientele of your business
  2. Collateral for receiving the loan
  3. Business and personal financial statements
  4. Incorporation or LLC documents (if needed)
  5. Credit references and tax returns
  6. Proof of proprietorship or sale if the business was acquired by you
  7. Material contracts/agreements (if necessary)

Advantages offered by business loans

Given below are the key advantages offered by business loans to the customers:

  1. Quick approval procedure
  2. Funds are deposited into your bank account within 5-7 working days
  3. Flexible repayment schedule
  4. No application fees are charged
  5. Minimum paperwork required

Business loan providers in India

Given below are the names of the reputed banks and financial institutions that offer business loans in India:

  1. ICICI Bank
  2. Sundaram Finance
  3. Citibank
  4. HDFC Bank
  5. State Bank of India
  6. IDBI
  7. Standard Chartered Bank
  8. Kotak Mahindra Bank
  9. Punjab National Bank
  10. Axis Bank
  11. Union Bank of India
  12. Federal Bank

Whether you’re just opening a new business or want to make the most of new opportunities, your business requires the ideal kind of financing at the right moment if you want it to flourish. A business loan from a bank can help you fulfill your dream.


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