What Is Business Loan
A business loan is an unsecured loan that is used for different business needs like business expansion or buying new inventories. Whether you are a wholesaler, retailer, or manufacturer, a business loan can help you to meet your day-to-day operational needs.
As a business owner, there may be times when you feel the need for quick and easy access to funds to optimize the growth of your business. The requirement may vary from expanding current operations and buying new inventory or machinery to taking up another large project or even starting a new business. Regardless of what the requirement may be, having a quick and hassle-free access to funds is an obstacle in most such cases!
Indeed, there are a lot of traditional lending institutions offering small business loan in India to businesses. However, when it comes to small businesses, the scenario tends to get a little difficult. This is because traditional lenders mostly offer business loan on the basis of collaterals which most of the small businesses are unable to furnish. As a result, there is a certain need-gap for the availability of credit to these small businesses hindering their growth and expansion.
Type Of Small Business Loan In India
No matter the type and size, capital is one essential component to meet the regular operational requirements of a business. There are different types of financing options available for businesses based on their domain, stage, and type.
Term loan:
Term loan refers to a loan where a fixed amount of money is borrowed for a specific period, and the money is paid back with interest. These are either taken for expanding the business or for purchasing plants and machinery. As these are long-term funds, thus, the amount involved here is high.
Working Capital Loan:
Working capital loan is taken to meet the short-term cash shortage or when the business’s cash is not enough to take care of the day-to-day operations. Nowadays, financial institutions offer collateral-free working capital loan that are usually taken for 6-12 months.
Machinery Loan:
A machinery loan is a type of business loan that finances the purchase of any new equipment or machinery. Technological advancements are creating innovative, state-of-the-art equipment every day. Such equipment makes business processes productive and efficient. By availing machinery loans, businesses can upgrade to better-quality equipment that can provide faster turnaround times, help in meeting production targets, and ultimately gain customer trust. This, in turn, helps businesses increase their sales and garner more profits. Any individual or business involved in the production of goods is eligible to apply for business loans.
Invoice Discounting:
Invoice Discounting taken to meet the short-term requirements, so only SMEs can avail themselves of these kinds of business loan in India. The tenure of this business loan ends on the due date of the invoice, and the full amount with interest is paid back. Invoice financing helps in improving the flow of cash in businesses.
Bank Overdraft/ Credit Lines:
The borrower is authorized to withdraw money up to a sanctioned limit from his account through an overdraft, even if the balance is low. The excess amount here is considered as a business loan which is paid back with interest. The line of credit can also be availed online.
Advances/Factoring:
It is not technically a loan. Here, a portion of the total invoice value, like 70% or 80%, is paid by the factoring company in advance. Both buyer & seller have to come to an agreement and work with the factoring company.
Retail Loan:
Retail loan is usually availed by individuals when they need credit to set up a business, purchase assets (property, vehicles), emergency medical purposes, or travel. The prerequisite is to have a good credit score since banks use it to ensure the individual’s repayment ability. A good credit score with a great repayment history can help in availing lower interest rates and better credit terms overall.
E-commerce Business Loans:
With the advancement of new technologies, smartphones, and the Internet, almost every business is moving online to set up its e-commerce website. The e-commerce sector is booming in India as many direct-to-consumer (D2C) brands have emerged in the last five years. The competition significantly increased which in turn requires online businesses to constantly invest in marketing, promotions, inventory, logistics, etc., to gain customer traction and keep up with the demand. E-commerce loan comes to the rescue and are one of the simpler ways for e-commerce businesses to avail funds.
Trading Loans:
One of the crucial stakeholders in supply chain businesses is the trader that connects the manufacturer and the consumer. Trading loans are provided by financial institutions to help traders avail quick and easy funds required for their day to day operations. However the majority of banks in India have stringent requirement and lengthy and slow processes. Any individual or business involved in the sale and purchase of goods is eligible to apply for business loan.
Do’s and Don’ts of Small Business Loan
A small business loan can be an excellent source for raising capital, expanding the company, or meeting the expenses. Still, it can also be a liability if you do not consider specific points before applying for a business loan online.
Understand Your Business Requirements:
First of all, businesses need to understand their requirements of why they need a small business loan, and how much they need. Borrowing too much will increase the EMIs and will also be a liability on the business. In some instances, companies do not even need a business loan, but they end up in debt. As business loan are not only how working capital or asset requirements can be fulfilled, it can also be done through investment, increasing production, or cost reduction methods.
Explore All The Options:
Usually, people have this misconception that banks are the only way business loan can be sanctioned, but it is not the case. There are many alternatives available in the market through which you can avail of business loan online or offline. Small business loan are considered a better option. Thus, before making any decision, businesses should look out for all the market options.
Be well-informed:
Today lenders offer both secured and unsecured loan. In the case of secured loan, lenders ask for collateral, whereas, in unsecured loan, businesses do not need to pledge their personal or business assets. Though the cost in case of an unsecured loan is higher than secured, it is much faster and less risky.
Do not apply unnecessarily:
Before applying for a business loan, businesses should see that the loan must benefit their business. They should think wisely and strategize with their business advisor before taking a business loan to hamper the company’s growth.s
Plan in advance:
Businesses should know beforehand where to put the loan amount immediately after receiving it. Through this, the amount will be used where it is supposed to be with minimum wastage. For example, a business loan is taken to expand business or for purchasing plants and machinery used in day-to-day operations will be considered a wastage.
Thus, keeping in mind the do’s and don’ts, businesses will be more careful, aware, and prepared before applying for a business loan.
Business Loan Fees & Interest Rates
| Customized Interest Rates | Starting @1.5% PM |
| Processing Fees | 2-3% |
| Loan Tenure | up to 3 years |
| Pre-closure Charges | 4% |
| Eligibility Criteria | > 5L Turnover in last 6 Months |
| Loan Amount | ₹ 50,000 – ₹ 50 Lakhs |
| Installments | Monthly |
Features & Benefits Of Business Loan
Collateral Free
We offers collateral-free loan for business to its customers. In other words, there is no need for any sort of guarantee, pledge, or investment to avail this loan.
Swift Disbursal
We follows a swift and hassle-free loan disbursal process. You apply for business loan and get it processed within 48 to 72 hours for an amount up to INR 50 Lacs.
Flexible Repayment Terms
Indifi gives flexibility to its borrower of choosing between weekly or monthly payment cycles. Please note that there are no hidden charges in this process.
Tailored To Your Business Requirements
A businessman might need funds for several reasons like procurement, development, and so on. Indifi facilitates tailor-made business loan that are customized as per the business requirements of the applicant.
Low-Interest Rates
The business loan interest rate rolls-out at low , starting from 1.5% per month. However, the borrower also needs to pay upto 2% processing fee.
Why Do MSME Need To Apply For Business Loan?
Here are some simple reasons which will help you make the decision faster:
Improved Cash Flow
Live up to your goals and aspirations by increasing business cash flow.
Business expansion
MSME loan helps to expand your business, hire more employees and renovate your office building.
Loan for new machinery/equipment
Experiment with and purchase new equipment based on your project requirements. Loan for MSMEs are helpful to establish your new machinery and plants as well.
Access to new technology
Always be ahead of the curve! Start upgrading to the latest technology by availing these loans.
Funds for seasonal and specific needs
Don't hesitate to hire seasonal employees and stock on the inventory based on your requirements.
Franchise Financing
With the help of MSME loan scheme you can start franchises for your business in other cities and expand your brand’s geographical footprint.
Funding for next project opportunity
Take risks at the right time to grab projects that yield you an increased ROI.
Why choose Indifi loan for business?
Here are some simple reasons which will help you make the decision faster:
Quick and Simple
Indifi follows a complete online business loan approval process with less documentation. It spares you tedious paperwork and long waiting queues making the entire process quick and simple.
Multiple lenders
Indifi brings multiple lenders and partners together, along with their own lending arm. Their prime motive is to fill the gap and help businesses in accessing unsecured loans.
Best Fit
The expert professionals will help you in getting the best custom-made business loan ever. The loan experts assess all the business capital needs and design a business loan plan accordingly.
Flexible and Transparent
Indifi believes in complete transparency in operations. You can get all the g loan related information on our webpages, upfront. Last but most important, we do not have any hidden charges.
How To Get Business Loan
Get a small business loan in three simple steps:
Apply Business Loan Online
Applicants who want to secure a business loan need to fill an online application form. This form will contain all the fund requirements and bank account information.
Documents For Business Loan
The applicant now needs to upload all the relevant documents along with the application form. These documents are bank statements, Adhaar Card Copy, PAN Card Copy, GST Filing, Business Registration Certificate, Drug License, VAT Registration, Trade License, and TIN.
Sanction Process
Indifi will sanction the business loan amount after verifying all the documents and application forms.
Business Loan Eligibility Criteria
Documents To Apply Business Loan Online
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Pan Card of promoters and the firm
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Address proofs of promoters and the firm
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Business registration proof
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Bank statement of the firm for the last 9 months
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In case of a business loan of more than 15 lacs, latest ITR is mandatory
Required Business Loan Documents
| Documents | Proprietorship | Partnership | Pvt. Ltd. / LLP / One Person Company |
|---|
| Bank statement (12 months) | Yes | Yes | Yes |
| Business registration proof | Yes | Yes | Yes |
| Proprietor(s) PAN Card Copy | Yes | Yes | Yes |
| Proprietor(s) Aadhar Card Copy | Yes | Yes | Yes |
| Partnership Deed Copy | No | Yes | No |
| Company PAN Card Copy | No | Yes | Yes |
Benefits of Business Loan
Better Cash Flow
Business loan for business are an excellent way to boost up the cash flow of a business.
Business Expansions
Business loan a vital role in increasing manpower, business expansion, and infrastructural development.
Latest Technology
You can incorporate advanced technology into your business operations with these loans.
Procurement of Machinery
Are you planning to procure new equipment or machinery? If yes, loan for business can help you with that.
Franchise Financing
Business loans allow you to initiate your business franchises and expand your operations.
New Project
Grab the most promising business opportunities that can boost your profits with the help of business loans.
Small business loan helps businesses in catering to the funding requirements. They also help small businesses grow and scale up their operations to meet the competitive market demands. Keeping in mind the funding needs and budget, the borrowers must see what type of small business loan is suitable for the business so that it does not become a liability and hinder the performance. The companies must understand what works for them and whatnot before making any decision. They must analyze the market and explore all the options to apply business loan online or offline. They must also plan their funding needs earlier with their financial advisor’s help so that the loan amount is utilized correctly and the business gets the maximum added advantage.
Business Loan FAQs
What is a business loan?
A business loan is a loan that is taken to fulfill business needs. It could be for business expansion, procurement of raw materials, renovation, hiring manpower, or buying advanced machinery.
What is Indifi loan?
Indifi is a leading NBFC in India that offers business loan to MSMEs with competitive interest rate starting from 1.5% onwards per month. Indifi provides collateral-free term loan and small business loan to businesses to overcome financial crunches.
Why should you take a business loan?
If you are looking forward to growing your business, a business loan can help you in executing your plan by making funds easily accessible to you. You can use this amount to open a new outlet, renovate the existing office/outlet, marketing and advertising, and exploring new growth channels.
How to apply business loan?
Applying for a business loan with Indifi takes less than ten minutes. All you need to do is fill your basic business information, bank details, & upload KYC documents through an online application process. There is zero paperwork involved in this process.
What documents For Business Loan will I require?
Here is the list of documents for business loan that you will require:
PAN card of the firm and promoters
Adhaar card
Business registration proof
The submission of the latest ITR is compulsory if the business loan amount is exceeding 15 lacs.
Address proof of firm and all the promoters
Firm’s bank statement for the last nine months
How can I speed up my business loan approval?
You can speed up your business loan approval process by filling the entire application form correctly in the first go. Moreover, you might be asked to furnish some additional information in the process. The sooner you provide the required details, faster will be your business loan approval.
How can I check the application status of my business loan?
Indifi updates the customers about their application status at every step.
How can I know the EMI for my business loan?
You can calculate your EMI with the help of the business loan EMI calculator.
What is business loan foreclosure?
Business Loan Foreclosure - Borrower closing a business loan before the actual maturity date by paying the full outstanding in lumpsum.
Are there any foreclosure charges for business loan with Indifi?
Indifi charges 4% early foreclosure charges from its borrowers.
What are the requirements of collaterals and security?
Business loans offered to owners of MSME are collateral-free that do not require any security deposit. However, bigger businesses that need huge capital generally do not qualify for collateral-free loans.
Can I avail a business loan if I have a low credit score?
Indifi uses its own proprietary algorithms and diverse benchmarks to analyze the business viability and loan repayment capacity of the potential borrower. Apart from these, business, vintage, income, bureau score, and business location are also considered in this process.
Can I change the due date of my EMI?
Due dates are fixed and decided by the lender
How is my CIBIL score affected if I close my business loan?
Pre-closure of business loan will positively impact your CIBIL score. It becomes a proof of your accountability and credibility.
What is a good credit score to get a business loan?
Indifi offers small business loan based on your business feasibility and repayment capacities. So, credit scores do play a vital role but there are other equally important parameters we use during application evaluation processing getting a business loan from Indifi.
What is the minimum required annual turnover of my business to be eligible for business loan at Indifi?
You should have a annual turnover greater than 10 lacs to be eligible for business loan at Indifi.
What is the maximum amount of business loan that I can take?
The maximum amount of business loan that you can take from Indifi is uto 50 lacs.
