What is Business Loan?

Business loans are unsecured income-based loans for self-employed individuals or companies.

Unsecured business loans have no requirement for a security or collateral to be submitted and are offered on the current financial strength and past credit record of the borrower.

Such loans can extend from Rs 1 lakh to 1 crore and have a repayment period of 1-5 years. They are suited for companies looking at funds for capital expenditure, infrastructure / business development, business expansion or to fund any small to medium term enterprise.

They are not as flexible as overdrafts and other credit lines which usually support day-to-day working capital requirements but are easy to avail with simple paper work and fast processing and the borrower does not need to lock in any asset or security as a collateral. Business loans are usually costlier than other forms of secured business finance.

Eligibility calculation for a Business Loan

Your eligibility is determined after looking at the following:

• Last 2-3 years business financials
• Years in business and current level of business activity
• Nature of the industry the business operates in and how that industry has fared in recent times
• The current level of obligations of the company i.e. the other Installments (EMIs) , credit limits and other types of finance the company may have
• The company's past credit history


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