India saw the incorporation of 1.85 lakh companies in the fiscal year 2023-24, signalling the country’s entrepreneurial growth. However, managing a business, whether it's a new venture or a well-established enterprise, comes with its own set of challenges, such as scaling operations, handling day-to-day expenses, and maintaining healthy cash flow. A business loan could be the ideal solution to meet these financial demands, ensure smooth operations, and seize growth opportunities.
A business loan is a financial product offered by banks to provide funding for business-related needs. It can be secured (requiring collateral) or unsecured, and the borrowed amount is repaid in instalments over a fixed tenure, as outlined in the loan agreement.
Keep reading to explore the crucial aspects of business loans, including eligibility criteria, the application process, necessary documents, and the countless benefits they provide.
Business loan eligibility
Before you apply for a business loan online, it is important to understand the eligibility requirements that banks impose. These criteria assure banks that borrowers have the financial ability to repay the loan on time.
• Age: Applicants must be between 25-67 years old
• Business vintage: The business should have been operational for at least 2 years
• Credit score: A CIBIL score of 680 or higher is required
• Office presence: Must have an office set up with a name board visible
• Profitability: The business should have been profitable for more than 2 years
• Banking records: A bank statement for the last 6 months is required to assess financial behaviour, obligations, and profit margins
• Debt facilities: The borrower should not have any existing overdraft facilities that could affect their capacity to manage additional loan repayments
• Active GST: GST3RB and GSTR1 filings must be completed on time
Get a quick business loan in just 4 steps
The business loan process is 100% digital, which means you do not have to visit any bank or handle physical documentation. All you have to do is apply online and then:
Step 1: Enter personal and business details: This typically includes basic information such as your name, contact details, business name, type of business, registration details, and operational history.
Step 2: Check your eligibility: The bank will assess your eligibility based on the details provided, which gives you quick feedback on whether you fulfil the necessary criteria.
Step 3: Complete the video KYC process: The next step requires you to undergo a Know Your Customer (KYC) verification. This can be done via a quick video call with a bank's official where you will show identification documents and confirm personal details.
Step 4: Get the loan amount: After your details are verified, the loan proceeds will be instantly transferred to your bank account. All details about the loan like the principal, interest rate, and repayment terms will be outlined in the loan contract.
Required business loan documents | A full checklist
1. For sole proprietors
Bank statement for the last 6 months: The business owner's name on the bank statement must match the name in the submitted business proof.
Business proof documents: A GST form is required. If the GST form is older than 24 months, provide any one of the following documents:
• Udyam Registration Certificate (URC)
• Shop act license
• FSSAI license
• ICAI - Certificate of practice
• Medical Council of India certification
• ICSI - Certificate of practice
• Import export license
If the GST form is less than 24 months old, Udyam Registration Certificate is mandatory.
KYC document: Aadhaar card and PAN card
2. For individual business owners
Bank statements: The name of the business owner on the bank statement must exactly match the name provided in the business proof.
Business proof: Udyam Registration Certificate is required. If the URC is less than 24 months old, you can submit any one of the listed documents:
• FSSAI
• Shop act license
• Medical Council of India certificate
• ICAI - Certificate of practice
• ICSI - Certificate of practice
• Import export license
Note: The issued date of the document selected from the above list should be greater than or equal to 24 months.
KYC document: Aadhaar card and PAN card
Why is a business loan a boon for your enterprise? Advantages explained
The advantages of obtaining a business loan are countless. With access to quick funding, you can seize opportunities that would otherwise be missed, buy essential equipment, or take advantage of bulk inventory discounts. Business loans can also help you smooth out cash flow fluctuations and meet operational expenses without delay.
The IndusInd Bank Quick Business Loan amplifies these benefits with its affordability, 100% digital convenience, and flexible repayment terms. Let's look at the key advantages of this collateral-free business loan:
Full digital process: You can apply for a business loan and even complete the remaining formalities digitally. You don’t have to worry about the hassles of physical paperwork, bank visits, or lengthy approval procedures.
Affordable interest rates: Lower interest rates mean you spend less on servicing the loan and more on investing in your business operations. This can help you maintain a healthy cash flow by keeping Equated Monthly Instalments (EMIs) and total borrowing costs manageable.
Borrow between ₹2 lakh and ₹20 lakh: Whether you need a small sum to cover daily expenses or a larger amount for capital investments, you can match the loan size with your exact financial needs. In simple words, you can avoid the pitfalls of under-borrowing or over-borrowing.
Lightning-fast disbursal: In the business world, timing matters. Delays in securing funds can result in missed opportunities, operational disruptions, or inability to cover urgent expenses. With the IndusInd Bank Quick Business Loan, the amount is disbursed instantly after approval, often within just 20 minutes.
Disbursal in existing account: Unlike many other lenders that require you to open a new current account to get the loan amount, IndusInd Bank deposits the funds directly into your existing account. This saves time and eliminates the hassles of managing multiple accounts.
No GST for loans up to ₹5 lakh: If you are planning to borrow up to ₹5 lakh or less, there is no GST requirement.
Key takeaways
A business loan acts like a lifeline for businesses of all sizes, from small businesses and mid-sized enterprises to even large corporations. By understanding the eligibility requirements, application process, and documents needed, you can simplify the loan process and secure funds without any hassle. The digital process further makes it easier for businesses to obtain funding without visiting banks.
The key is to find the right bank that offers a collateral-free business loan, competitive interest rates, higher loan amounts, flexible repayment tenures, and lightning-fast disbursals. After that, simply apply online and give your business the financial boost it deserves to grow and thrive.
Disclaimer: This article is published in association with IndusInd Bank and not created by TNM Editorial.