Starting or expanding a business often requires massive capital. But the good news is that getting a business loan of up to ₹10 lakh has become much easier in India. With multiple lenders offering targeted financial products, you can now secure funds to manage cash flow, invest in some assets, or fund your growth projects. Let’s discuss briefly how to get a business loan up to ₹10 lakh, covering eligibility, types of loans, and the application process.
Types of Business Loans in India
When looking for a business loan of up to ₹10 lakh, you can explore several options. Some include:
- Term Loan: This is a traditional loan repaid in fixed EMIs over a specified term. It is ideal for buying equipment, expanding your workspace, or covering any major expenses.
- Working Capital Loan: This is mainly used to manage daily operations. It helps you with cash flow, paying suppliers, or handling any seasonal demands.
- Overdraft Facility: Overdraft is a flexible option that allows you to withdraw funds up to a certain limit from your business account as needed. You only need to pay interest on the amount used.
- MSME Loans: This is specifically designed for Micro, Small, and Medium Enterprises (MSMEs). Such loans often come with benefits like lower interest rates and easy documentation.
- Pradhan Mantri Mudra Yojana (PMMY): This government scheme offers loans under three categories: Shishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh). Mudra loans are collateral-free and excellent for small businesses.
Eligibility Criteria
Usually, lenders will assess your profile to determine your eligibility for a business loan. Some of the key factors include:
- Business Type and Age: Most lenders prefer businesses that have been operational for at least 1 year. Startups can explore schemes like Mudra or government grants.
- Annual Turnover: Banks typically expect a minimum annual turnover (which can vary depending on the lender).
- Credit Score: A good personal or business credit score (usually above 650) increases your chances of loan approval.
- Profitability: Showing consistent profits over the last 1-2 years helps assure lenders that your business is stable and has growth potential.
- Business Plan: If you are applying as a startup, a detailed business plan, market strategy, revenue model, and projected growth can strengthen your application.
Required Documents
For an easy and error-free application, keep the following documents ready:
- Identity Proof: PAN card, Aadhaar card, passport, etc.
- Business Registration Proof: GST registration, trade license, or other documents that verify business legitimacy.
- Financial Documents: Bank statements (last 6-12 months), income tax returns, balance sheet, and profit & loss statements.
- Ownership Proof: Lease or ownership documents of business premises (if applicable).
- Collateral Documents: If you are applying for a secured loan, property documents or other assets you plan to pledge may be needed.
Steps to Apply for a Business Loan in India
Some of the steps to apply for a business loan in India include:
- Step 1: Compare Loan Type and Options
Choose a loan type based on your needs. Next up, research several banks, NBFCs, and government schemes to find the best offer. Look at the interest rates, loan tenure, fees, and flexibility. For example, public banks offer MSME-friendly loans while private NBFCs provide quick approvals, but may charge higher interest.
- Step 2: Gather Necessary Documentation
Accurate documentation speeds up the approval process and reduces any chances of rejection.
- Step 4: Submit the Application
You can apply either online or at a bank branch. Many banks and NBFCs now allow easy online applications. This simplifies the process and offers faster approvals.
- Step 5: Wait for Approval
At this stage, lenders will evaluate your application and may contact you for additional details or clarification. Once verified, you will receive a sanction letter that will detail the loan amount, interest rate, and terms.
- Step 6: Loan Disbursement
After you accept the terms, the loan amount is disbursed to your bank account.
Final Thoughts
Summing up, always evaluate your loan options based on your specific needs and repayment capacity only. If you are an MSME or a startup, Lendingkart provides a quick and hassle-free option to secure a business loan up to ₹10 lakh. With its easy online application process, minimal documentation, and no collateral requirement, Lendingkart can be a solid option for small businesses that are in need of growth capital in India.
Yet again, be sure to review their terms and maintain clear financial records. Remember, a well-prepared application can improve your chances and help you secure funds efficiently to grow your business.
