1. What are the different products available in the category of business loans?
    Business loans are meant for self employed persons and can be either secured or unsecured. Business loans can be availed by both professionals and non-professionals.

    Secured loans for businesses refer to loans which require collaterals. Please refer to the loan against property/ securities page to understand more about secured loans.
  2. Who can avail an unsecured business loan?
    Companies, which are, registered as sole proprietorships, partnerships or private limited companies can avail an unsecured business loan. Also, proprietors of proprietorship firms, professionals (Doctors, CA etc), partners in partnerships and Directors in private limited companies would be able to avail unsecured business loans as individuals.
  3. I am a director in an Indian company, but I am not an Indian resident. Would I be able to get a business loan in my name?
    Most banks do not provide business loans for NRIs. There may be some exceptions for the same.
  4. Would I be able to get a business loan to start a new business?
    No, it is not possible to get a business loan for the same. Most banks ask for a proof of continuity in business for a minimum of 3 years before approving a business loan.
  5. I have just filed my income tax returns for the last 3 years. Would I be able to avail a business loan?
    In case advance taxes were paid and other eligibility criteria are met, most banks would consider your application for a business loan.
  6. Do I have to own a house to avail a business loan? Should I be staying in the same?
    Yes, it is necessary for you to own a house in the same city where you are availing the loan. But it is not necessary for you to stay in that house.
  7. Is there a possibility of rejection in case there are inward cheque bounces in the banking account?
    Yes, there is an increased probability of rejection in case of cheque bounces in the account. But, most banks consider the loan application in case of less than 4 bounces during the last 6 months if there are valid reasons.
  8. Would outward cheque bounces in the company's account affect the processing of the loan?
    Yes, outward bounces can affect the approval of a loan but the weightage given is much lower than that of inward cheque bounces.
  9. I have an outstanding loan for which there is an EMI outgo. Would it affect my chances of getting a business loan?
    It may, as all existing obligations are taken into consideration while calculating the maximum loan amount for a business loan.
  10. I have an existing business loan with a particular bank. Can I enhance the same loan or avail another loan (parallel) from the same bank?
    Yes, most banks allow both these options after the existing loan has run for a specific period of time.
  11. If my loan application gets rejected once, can I apply for the same again? If so, are there any constraints on the time of application?
    Yes, you would be able to apply for the same loan from the same bank again. But, there are constraints on when you would be allowed to do the same. This varies from bank to bank and normally ranges around 2 to 3 months.

    It would be wise to resolve any problems which lead to the rejection of the current loan, before applying again.
  12. Would there be any benefits in going for a business loan from a bank, with which I have an existing relationship?
    Though there could be some benefits, these are usually minimal in nature. So, you would do wise to consider all banks with an open mind while looking for a loan.
  13. Are there any constraints on applicant's age for availing a business loan?
    Yes, there are age limits for availing a business loan. Business loan can be availed by people who are above 20 years and below 65 years of age. The maximum age pertains to the age at the time of maturity of the loan.
  14. Do I need a guarantor for availing a business loan?
    No, most banks do not ask for a guarantor while providing a business loan.
  15. What can I use a business loan for?
    Banks do not tie a business loan to any specific purpose and so they can be used for any purpose. Generally people use business loans for business expansion, children's education, marriage expenses, travel, medical expenses, home improvement, etc
  1. What are the prevailing interest rates on business loans?
    Interest rates on business loans vary based on the profile of the customer, the bank being dealt with and the loan amount applied for.

    Profile of the customer for the purpose of a business loan is determined through the credit history, turn-over of the business, qualification, profession, etc

    To get a clear idea about the existing rates on business loans, please refer to the product listing.
  2. There are several terms like 'fixed/ floating', 'flat/ diminishing' making rounds in the market in relation to the interest rates. What do these terms mean?
    Normally the rates quoted on business loans are monthly diminishing in nature, wherein the interest to be paid is calculated based on the outstanding principal for the month.

    And usually business loans come with fixed diminishing rate schemes only. Floating rate schemes, where the rate of interest changes based on the market conditions are more common in housing loans.
  3. What are the charges applicable on a business loan?
    Processing fee and the interest are the primary charges levied on a business loan. Along with these, there may also be charges for availing a credit shield which most banks offer and the service tax. In case of bounces in the loan repayment or part-payment/ pre-closure of the loan, there may be other charges as well. For exact details about all the charges, please refer to the comparison table.
  4. Is insurance/ credit shield necessary to get a business loan?
    Though insurance/ credit shield is not mandatory for a business loan, it is advisable to go for one as it covers the financial burden associated with the loan in case anything unfortunate happens, especially in case of proprietorships.
  5. What would be the minimum and maximum loan amounts on a business loan?
    The loan amount varies from bank to bank and normally ranges from a minimum of Rs. 1 lakh to a maximum of Rs. 30 lakhs. Some banks do provide loans which are more than Rs. 30 lakhs. For exact details about the loan amount ranges, please refer to the comparison table.
  6. What is the maximum loan amount which I would be able to get?
    The maximum loan amount for a business loan is dependent on multiple parameters related to the financials of the company. Roughly it may vary from 2 to 4 times of the net profit shown in the P & L statement of the company.
  7. What are the tenures possible for a business loan?
    Most banks offer tenures ranging from a minimum of 1 year to a maximum of 5 years on business loans. There can be exceptions for the same.
  8. What are the documents required for getting a business loan?
    • Documents for KYC norms
      • Identity proof
      • Address proof
      • Date of birth proof
      • Signature proof
    • Income documents (All ITR related documents - SARAL with computation, balancesheet, P & L account) for the last 3 years
    • Board resolution/ Letter of authority (For Private limited/ Partnership)
    • Copy of article of association/ partnership deed/ MOA
    • 6 months bank statement
    • Own house proof
    • Welcome letters or schedules for all existing loans
    • And in case of professionals, registration certificate and degree certificate supporting the same
    • Business continuity proof
  9. What would be the turn-around time for getting a business loan?
    Depending on the bank applied for, profile of the customer and availability of documents with the customer, the turn-around time can vary from a minimum of 3 days to a maximum of even a month in some cases.
  10. Is there any overdraft facility available for unsecured business loan?
    No, unsecured loans do not have an overdraft facility. The same might be possible in a secured loan.
  11. Why do financiers ask for cheques when the repayment is carried out through ECS? How many such cheques are needed?
    Financial institutions insist on cheques to be collected from borrowers for security purposes. These cheques are utilized in case there is a problem with clearance for ECS.

    The number of cheques required varies depending on the financial institution and ranges from 3 to 7, depending on the tenor of the loan and other parameters. Apart from these, a cancelled cheque may also be needed to authorize ECS payments.
  12. Is it possible to make part-payments against a business loan?
    Part payments are normally not allowed in case of business loans though there may be some banks which allow the same.
  13. Can I pre-close a business loan earlier than planned? Are there any penalties applicable for the same?
    Yes, you can pre-close a business loan after a minimum of 6 EMI payments with most banks. Closure charges vary from bank to bank and in some cases vary based on the time of closure. To get the exact details on the same, please refer to the comparison table.
  1. How will I receive the loan amount?
    It varies from bank to bank and it may be through a NEFT transfer directly to your account, or a demand draft or manager's cheque delivered to you physically.
  2. What is the net amount that would be credited to my account?
    The total loan amount approved by the bank and agreed upon by the customer, less the processing fee, service tax where applicable and insurance if opted for, would be the net amount that would be credited to your account. In case of top up loans, the amount credited would be the amount calculated above less the principal outstanding on the previous loan.
  3. Will I receive any confirmation from the bank on my loan?
    Normally banks send a welcome kit on disbursal of the loan. The kit contains the repayment schedule showing the EMI amount, EMI payment date, ROI, tenor and the loan amount. In some cases, the kit also contains copies of the signed loan agreements.
  4. What will be the mode of repayment for my business loan?
    In case the loan and the account from which the loan would be repaid are with the same bank, then a standing instruction would be taken by the bank. In case these are at different banks, then the payments can be made either through ECS or through Post Dated Cheques (PDCs).
  5. Is there flexibility in making payments through my individual account when the loan is availed by my company?
    Yes, it is possible in case of proprietorship firms. In case of companies which are not proprietorship firms (Private limited company, Partnership, etc), the same would not be possible. The repayment has to be done only through the company's account.
  6. When would I have to start repaying my loan?
    With most lenders, for loans availed before the 20th of a particular month, the EMI is payable from the following month. In case of loans availed between the 20th and the last day of a month, the EMI is payable from the month after the next month.
  7. What happens if an EMI payment against my loan bounces?
    In case of a bounce, most banks charge a penalty. And in most cases, it gets presented for a second clearance in the same account. In any case, it would be prudent on your part to get in touch with the bank to discuss the possible course of action to ensure a clean credit history.
  8. What do I do if I require more funds after disbursal of my loan?
    Depending on the bank, you may be able to get a top-up on the existing loan, subject to their terms and conditions. You can also go to other banks for your new credit requirement.
  9. Is it possible to transfer a business loan from one bank to another? Are there any charges applicable while doing the same?
    Yes, it is possible to transfer a business loan. But pre-closure charges might be applicable while doing the same.
  10. In case my loan gets rejected, would my documents be returned to me?
    Yes, banks return all documents to the customer in case the loan gets rejected. These are sent by the bank directly to the address for communication provided by you.
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