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Home » Business Loans – A Great Support To Start And Grow Your Business

Business Loans – A Great Support To Start And Grow Your Business

Business Loan

To start a new business or to expand the existing one, you will need capital. If your business is new and doesn’t have good credit history or collateral on which the lender can base their lending decision, then you will need to apply for business loans. You have probably heard the term “business loans” thrown around. But what exactly does it entail? A business loan is an amount of finance that helps an individual start a business or sustain an existing business. The bulk of the money is then given to the borrower in stages as he or she uses it.

Business loans are designed to assist in meeting small businesses’ capital requirements. There are numerous banks that offer term loans at attractive interest rates. Banks usually facilitate the application process and in turn, receive payments within a specified period of time.

Boost Your Business Potential

Business loans are a valuable asset for any business. From owning your own business to working as an employee, the challenges that you face with regard to getting finance can be handled well with a business loan. There is no doubt that when you want to start a new venture or expand your existing business, you will need some amount of capital. However, it is necessary to know how much capital you need and how you can access finance easily. When you have identified your needs, the next step is to find out where you are going to get the finance from and what kind of loan suits your requirement.

What are the Benefits of a Business Loan?

  • Working Capital Support: Taking out a business loan can help borrowers improve their businesses and stay afloat in the face of financial hardship. A business loan can be used to pay back debts owed to suppliers, market products and services, and handle a cash-flow shortage.

  • Convenient: Loans are also generally easier to get than other forms of financing like a business line of credit or equity investment. Banks and non-banking finance companies (NBFCs) are the most common sources of business loans.

  • Flexible Usage: With an equity investment, your options are limited to multiplying the monies at hand. However, with a business loan, you can think big, about expanding your business beyond just catering to local consumers.

  • No Need to Share Profits: With a business loan in hand, you are free to decide how exactly you want to run your company. It can scale up, expand or even purchase new equipment and facilities. But if you try to do this with financial assistance from investors, some terms and conditions may demand the profits of your business get shared with them.

  • Wide Range to Choose From: Banks will have a variety of categories to choose from when it comes to business loan schemes. The most popular scheme is the term loan where you are allowed to repay the loan in small installments across several months or years. The machinery loan scheme on the other hand includes deals wherein you get an option to buy new machinery at low-interest rates.

  • Benefit on Taxes: When you borrow money from a bank or an NBFC, the interest charged on loan is tax-exempt if the funds are used for business purposes. This means that you may be able to set off your tax liability to some extent. There are also other tax benefits that corporate borrowers enjoy.

  • Upgrade Credit Worthiness: Taking out a business loan can have a positive impact on your business’s credit rating. You need to make timely payments, and repay the loan on time, to see this impact. In the future, it will help you get financing at lower interest rates.

General Details About Business Loans

The details of every Business loan vary from one lender to another. Here we are going to mention the general details of the same for your reference.

  • Interest Rate: 8.85% p.a. Onwards

  • Loan amount up to Rs.40 crore

  • Loan tenure: up to 120 months

  • Processing Fee: Up To 6.5% of the borrowed loan amount

  • Collateral: None

Business Loans with the Best Interest Rates

Let’s take a look at some of the best interest rates on business loans offered by some of the most reputable banks/NBFCs to make your business perform at its best potential.

Banks/NBFCs

Interest Rates (p.m)

HDFC Bank

10.00% – 22.50% p.a.

Axis Bank

14.25% – 18.50% p.a

IDFC First Bank

14.50% p.a. onwards

Kotak Bank

16% – 19.99% p.a.

Fullerton Finance

17% – 21% p.a.

ICICI Bank

17% onwards

Tata Capital Finance

19% p.a. onwards

SBI Bank

11.20% onwards

In Conclusion

In summary, we can say that having the right business cash can do a world of good for your business. It can provide you with the impetus required to grow your business and keep it on the right track. All you have to do is choose the right type of loan and borrow only as much as you need. After all, your business is too precious to lose at any cost.

FAQs

Generally, in India, the loan facilities offered under a Business Loan are Working Capital Loan, Term Loan (Short & Long-term Loan), Letter of Credit, Bill/Invoice Discounting, Overdraft Facility, Equipment Finance or Machinery Loan, and Loan schemes issued by Govt.

A term loan is usually considered when there’s a need for continuous working capital. It allows you to repay in one go with no prepayment penalty. For example, if you’re repaying a business loan over the course of 5 years, you can repay the entire amount at the end of five years using your existing cash flows. This form of flexibility allows you to generate cash from other sources to repay your loan without affecting your profitability.

To get a business loan, you generally don’t need to provide security or collateral. You can check the lender’s terms and conditions to know what is generally accepted.

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