Eligibility
Banks provide loans to business people for their short or long term financial needs. At various stages of running a business, capital is needed either for long term or short term needs. Business loans are provided to all kinds of enterprises like sole proprietorships, partnerships and private limited companies. Though income requirements can vary depending on banks, normally net income of the concern should be more than Rs. 150,000 per annum for business loan up to Rs. 15 lakh and over Rs.3 lakh for business loan above Rs. 15 lakh. A maximum of two incomes of the partners or directors holding a minimum of 25% stake each can be clubbed to the income of the concern. So, before going for a business loan properly review the situation and see how much money you need and at what time. And don't forget to review your financial situation to know how much loan you actually need and how much money you can repay easily.
Documentation
Banks offer business loans for various needs of enterprises like expanding, modernizing or improving infrastructure. Though any business person can opt for a long or short term business loan, there are certain eligibility that needs to be fulfilled. Unless sure of your eligibility including your capacity to pay back the loan amount, no bank will give your any business loan.
There is also need of submitting various documents while applying for a business loan. There are differences in the documents required for various types of companies like sole proprietorship firm, partnership firms and private limited companies. The documents needed may also vary slightly depending on the bank you have applied for the loan. Generally the following documents are required by banks for providing a business loan for a sole proprietorship firm:
- Proof of identity of the sole proprietorship firm.
- Proof of individual identity of the proprietor.
- Proof of residence address of the proprietor.
- Certified balance sheet of the enterprise for last two years.
- Copies of IT returns for the last two years.
- Bank statements of last 6 months for business credit up to Rs. 15 lakh and last 12 months for business credit above Rs. 15 lakh.
If the case of a partnership firm proof of identity of the partnership firm as well as proof of individual identity for all the partners along with balance sheet of the last two years have to be submitted along with a copy of the partnership deed. If you are applying for a loan for a limited company, then proof of identity of the limited company, copies of memorandum and articles of association, certificate of incorporation, board resolution, copy of annual return establishing the shareholding pattern need to be submitted at the time of applying for the business loan.
However, when applying for a business loan check with the bank about the exact documents needed by them for providing the loan.
Interest Rate And Fees
Interest Rate
Reducing Rate 17 -19 % ( Depend on your selected Banks, Products and Amounts)
Processing Fees
2% Processing Fees + 0.25% Stamp Duties + Insurance ( Its Varies Depend on Bank)
