India is fast becoming a land to hundreds and thousands of new businesses. While these businesses may have different chains of thoughts and distinct goals, there is one thing that is common all across them, i.e., the need for funding. Depending on the formation of the business, whether it be a public company or limited etc, there might be different funding eligibility. There might be Limited company formation benefits that can help with certain funding channels and then other business structures could qualify for other funding.
After all, every single aspect of a business, whether it is the purchase of fixed assets, the management of operations, production and storage of inventories, marketing and sales, expansion, or diversification need a significant amount of capital. Thankfully for these entrepreneurial ventures, a wide array of leading banks and NBFCs provide business loans.
If you too are on the lookout for funding for your business through HDFC Business Loan, or any other loan for that matter, let us help you understand what exactly a business loan is, and how can you avail it. We will also guide you with respect to the documentation that you would require to apply for this much sought-after loan.
What is a Business?Loan?
A business loan is essentially a credit offered by a bank or a lender aimed at helping the business owner meet their funding needs. Depending on the type of business, and its requirements, a business loan can be used for a wide array of purposes, as per the needs of the enterprise.
Business Loan Amount
More often than not, the loan amount offered under this category ranges from Rs. 50,000 to Rs. 4 crores, depending on the bank or NBFC you chose, as well as the requirement and repayment capacity of your enterprise.
Business Loan Tenure
Depending on the lender you chose, and the type of business loan, your repayment tenure may vary from 3 years to 15 years.
Business Loan Interest Rate
Based on your repayment history, as well as your financial standing, your business loan interest rate may vary from 10.6 to 27% per annum. Again, this will be largely determined by the lender you chose for procuring the loan.
Who Can Avail a Business Loan?
Ideally, all forms of businesses including sole proprietorship firms,?partnership firms,? private or public limited companies are eligible for a business loan, provided the age of the borrower is between 21 to 65 years of age, and that they are able to furnish the relevant documents.
Documents Required for Business Loans
In order to qualify for a business loan, and successfully file your application, you will be required to submit the below-listed documents. Here, it is crucial to understand that this requirement varies slightly from one lender to another.
1. Identity Proof
You can furnish this in the form of your Passport, PAN Card, Voter ID, Driving License or Aadhaar Card.
2. Residence Proof
You can offer the same in the form of your Ration Card, Telephone Bill, Lease agreement, Electricity Bill, Passport, Trade License or Sales Tax Certificate.
3. Age Proof
This can be given in the form of Passport, PAN Card, Voter ID or Aadhaar Card.
4. Financial Documents
These documents often vary on the basis of the type of business for which the loan is to be acquired.
For Self-Employed Individuals -Professionals:
IT Returns (Copies) for the past 2 years
Bank Statements for the past 6 months
P&L as well as Balance Sheet for the past 2 years (Audited by a CA)
For Self-Employed Individuals – Non-Professionals (Sole Proprietorship):
IT Returns (Copies) for the past 2 years
Bank Statements for the past 6 months
P&L as well as Balance Sheet for the past 2 years (Audited by a CA)
For Private Ltd. Co. and Partnership Firms
IT Returns (Copies) for the past 2 years
Bank Statements for the past 6 months
P&L as well as Balance Sheet for the past 2 years (Audited by a CA)
5. Proof of Identity of Business
This also varies on the type of business for which the loan is to be acquired.
For Sole Proprietorship
The proof of identity, in this case, can be furnished in the form of PAN ID, copy of IT Return of the concern or Municipal Tax, Water or Electricity Bill in the name of the concern
For Private Limited Company
The proof of identity of business can be provided in the form of Sales Tax Number, GST Number, Excise registration, or a Copy of IT Returns Water. This proof can also be provided through Electricity Bill, Registration under Shops and Establishment Act, PAN ID or Municipal tax bill in the name of the concern.
In this case, proof of identity for at least two directors also needs to be furnished, which can be done with the help of any government issued photo identity card.
In addition to the aforementioned documents, you may also be required to furnish these documents –
- Copies of the Sales Tax Returns for the past 3 years
- Copy of periodic stock, age-wise book-debt, and creditors-statement for the latest three months
Of course, to complete the procedure, you must submit a duly-filled Business Loan Application Form, along with a passport-sized photograph.
We hope that you are now aware of all the documents that you ought to be prepared with if you wish to Apply for a Bank Statement Mortgage Loans or Business Loan. So, wait no more, before you pick a bank or NBFC which has the best business loan on offer, and apply for the same.
