A Business Loan may be availed by companies regardless of their scale: small, medium, or large; to pay for staff salaries, new equipment, rent, extension, office supplies, etc., when the cash reserves prove to be insufficient.
Today, numerous lending institutions in India offer collateral-free Business Loans at affordable interest rates, with high loan amounts, flexible payment tenure, and many other perks, especially when you apply online from new-age NBFCs like Clix Capital.
You have access to a free Business Loan Calculator – input what you need and what you can pay, and instantly you will get a plan suiting you. The recommended plan shows interest rates, repayment terms, and EMI so that you can make an informed decision. However, before you apply for a business loan, you must know about important terms, conditions, and regulations in India. Let’s discuss this.
General Business Loan Eligibility conditions
- Age Requirements: Minimum age for availing of a Business Loan is 21 years and under 65 years when the loan tenure ends
- Entities Eligible for a Business Loan: A proprietorship, private limited company, closely held non-listed company, partnership firm engaged in manufacturing, trading or services
- Business Vintage: Typically, the business must be running profitably for at least 3 years
- Experience in the business world: Business must be running on the same premises for at least 1- year.
- Yearly Turnover: At least ₹ 1 crore
- Credit Score: A CIBIL credit score of 700+
- CMR Rating: Up to 6
- Nationality: Indian citizens
Documents Required for Business Loans
NBFCs and other lending institutions use certain standard procedures when processing Business Loan applications and seek specified documents to approve the loan. After using the business loan calculator, an applicant must also check the set of documents that a lending institution might require for verification. As a result, to be eligible for a Business Loan, the entrepreneur must have the following documents for verification of the Business Loan application to have a good chance of getting approval:
- Address proof like an Aadhaar Card, DL, Voter’s ID, etc
- ID proof like PAN card, Aadhaar card, etc
- Certificate of Incorporation for a corporation or an LLP (Limited Liability Partnership)
- Partnership Agreement (for Partnership Firm)
- IT Return Copies
- GST Registration / Service Tax Registration
- Account Statements of at least 6 months
- Profit and Loss statements for 2 years audited by a CA
Regulations of Business Loans
Repayment Clause
It is an essential clause of the Business Loan Agreement and determines the repayment term. On-demand, fixed, and flexible terms are the three types of repayment options available. On-demand refers to a term where you always keep some specific amount as a deposit which the lending institution can ask for at any time. This type of repayment term is difficult to manage. Hence, selecting a repayment clause with a set duration or flexible duration is the best option for businesses.
Security Cover Clause
In this clause, collateral or personal guarantor against the loan is needed. It allows lending institutions to seize the asset pledged by the borrower in case of default. But, in the case of unsecured Business Loans, no collateral or guarantee is required, and hence the security clause is not applicable.
So, if you are a business owner planning to take a Business Loan in near future, consider the terms and conditions mentioned in this article before you apply. Also, to save time, energy, and effort, you can prefer applying online on the website of top lending institutions like Clix Capital to get faster approval and quick disbursal.
Author Bio
Amaira Sharma
Amaira Sharma is a finance expert and former business growth strategist who has more than 8+ years of experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses.
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