Small Business Loan

Business loans are available to self employed professionals, firms and corporations, to meet their operating expenses, finance capital expenditure (or acquisition of fixed assets) towards starting or expanding a business. Even industrial units are given business loans, to swap existing high-cost debt from other bank / financial institution. Apart from providing funding, bank can also issue letters of credit or give a guarantee, on behalf of the customer, to the suppliers and even government departments, for the procurement of goods and services on credit.

The maximum amount of business loan that can be sanctioned varies from bank to bank. However, the minimum loan amount is Rs. 25000 and maximum loan tenure is 5 years. Generally, no security is required for business credit up to a certain limit. For business loans above the limit, banks usually require a collateral security or a percentage of business loans as margin, in the form of fixed deposit with the bank. Business loans are similar to an overdraft and are available like a limit on current account. In this case, the interest is charged only on the actual amount utilized, rather the entire amount of loan.

Business Loans

Professional loans, as their very name suggests, are provided to self employed professionals like Doctor, Chartered Accountant, Interior Decorator, Architect, Company Secretary, etc. Unsecured in nature, this type of loan is not given to manufacturing, trading or processing units. The amount of loan varies between Rs. 25000 to Rs. 25 lakh, considering the age of the applicant, his financial standing, his repayment capacity, tenure of the loan (maximum 5 years), etc.

In case of professional loans, the rate of interest depends upon the prime lending rate, is calculated on diminishing balance and can be on the fixed as well as fluctuating basis. In many cases, it depends upon the customer's profile and his financial capacity. The payment is made through EMIs and in only a few cases, tangible collateral security is required.

Documents Required
Proof of Identity (Passport Copy/ Voters ID Card/ Driving License)
Address Proof (Ration Card/ Telephone Bill/ /Electricity Bill/ Passport)
Bank Statements (latest 6 months bank statement /passbook)
Latest ITR, along with computation of income
Balance Sheet & P&L Account for the last 2 yrs, certified by a CA
Qualification Proof of the Highest Professional Degree
Proof of Continuation (Trade license /Establishment /Sales Tax Certificate)
Two passport size photographs
 
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