Types of Business Loans

• Working Capital - This loan is borrowed to meet the daily working exenses of the business like paying salary, purchasing of raw material, maintaing cash flow etc. These are generally provided on a higher rate of interest and small tenure say upto 12 months.

• Term Loans - These are the loans which are provided on a specific rate of interest for a specific time period say 12 months to 5 years. Loans having tenure upto 12 months are short term loans and the loans with higher tenure are terms as long term loans.

• Letter of Credit - Businesses who are trading with the unknown cliens especially in case of overseas client.

• Bill/Invoice Discounting - This is a loan which is granted on the basis of the value of outstanding sales invoices lying with the business.

• Overdraft Facility - Bank provides the overdraft facilities with the running current account. Business can use the amount in excess of the account balance for a specific very short term.

• Machinery Loan - This loan is designed to finance the purchase of equipment or machinery for business. It is a type of secured loan.

• POS Loan - In this business can receive a lump sum amount of money as a loan in exchange of a specific % of future Debit card or Credit Sales.

• Startup Loans - These loans are provided to the newly set up businesses so as to enable them to be established properly.

Eligibility Criteria

It may depend upon the lender, but some common criterias are mentioned below 

• Vintage - Vintage of Business must be atleast 2 years.

• Turnover / Net Profit / Net Worth - Amount of loan highly  depends on the turnover and net worth of the business.

• Creditibility - Higher the credit score higer the chances of approval.

• Debt-income Ratio - It is a ratio between the Debt on the borrow and the income of the borrower. Higher the ratio less chances of loan approval.

• Business Registration - Business Registrations like Incorporation Certificate, MSME Certificate, GST Registration etc shows the hight trust value to the lender.
  Repayment Capacity

Documents Required:

• KYC Documents of business and business owners like Identification proof Address Proof.

• Income proof of business like Income Tax Return/Bank Statements.

• PAN Card of business and business owners.

• Proof of Business Registration.

• GST Registration.

• Other Documents to check credit worthiness of the business.

• Loan Application Form.

Benefits of Business Loans

• High value Loan amount can be granted.

• No need to provide any collateral.

• Quick Approval and Disbursement.

• You can use the funds for any of the purpose you wish for your business.

• Timely repayments helps to increase the credit score.