How To Apply for a business loan to starting a Small business?

To promote small enterprises in the country, the government has started various loan schemes. Apart from the Pradhan Mantri Mudra Yojana, there are many other schemes in which you can take a small loan to a large loan. At this time, according to the schemes of the central and state government, you can take a loan of Rs 50,000 to Rs 10 lakh for your business.

Whether the business is big or small, capital is needed for every business, capital is the basic basis of business, to start it, to carry it forward. It is not necessary that every business person has money, and if there is no money then he cannot do business, it is not like that at all. The arrangement of loan is there only so that every person can do business according to his wish. There are many types of loans and they are given by many financial institutes. Even the government is giving loans to grow small businesses. The only difference is that everyone has his own loan terms and his own rate of interest. We will tell you how to take a loan for small business. By the way , the facility of online loan application for small scale industries is also being provided by the government in 59 minutes.

Business Loan Information 

Loan means lending in common language. The only difference in this loan is that it has to be taken from a private company or bank, not from any particular person. There are three main types of loans:

  1. Principal Principal Amount)  the principal is also called the original amount, it is being taken as the amount borrowed. After applying for the loan, whatever amount is availed becomes the principal amount or the principal amount.
  2. Interest rate (Rate Of Interest)  It looks the most important, what the interest rate on the principal.
  3. Loan period (Duration Of Loan)  loans taken for how long and what the limit is very important to take care of it.

Ability Business Loan (Eligibility Of Business Loan) –

Before taking a loan, every bank has a loan plan, in which it is decided that who is eligible to take the loan. The information related to it is as follows –

  • There is a condition of any loan that the person who is taking the loan should be a citizen of India. His age should be more than twenty-three and twenty-four years and less than fifty-eight years.
  • The person should be in normal condition i.e. he should not have any kind of mental or physical illness.

Tax documents on business loans (Document Require Of Business Loan) –

Whether it is government work or private loan, some documents are important in all for your identity. The list of documents required for the loan is as follows-

  • Passport size photo
  • copy of aadhar card
  • copy of pan card
  • Copy of sales tax return for the last three years
  • Copy of Income Tax Return for the last three years
  • bank account details
  • project report
  • Statement of Estimated Accounts for the Coming Years
  • Credit monitoring arrangement data (CMA data, if required)
  • Paper of properties or any liquid asset as security
  • Two guarantors are also required to secure the loan.

Take note of things in business loans (Important Point For Business Loan)  concentrate on the relevant information to take any loan is very important, in that key is as follows

  • Business Planning  (Planning Of Business) –  to fix this business should take the whole plan before turning, to trade what the object is to find how much money, how to limit expenses and profit margin. It should do business after taking care of all the things, so that there is no loss of any kind.
  • Income instruments Income Of Source) – which is also important to see through its income, the person being given the loan. By what means is he getting income and, how much income is he getting or the business for which he is taking loan and how much income will he get from it. So that it can be known whether he will be able to repay the loan given or not.
  • Down payment Down Payment)  Whenever you take a loan, seeing his down payment first. Down payment which if we understand in general terms, is the amount of the loan to be availed later. So the terms related to it should be understood, so that there will be no problem in future.

For example , we applied for a loan of 15 lakhs. Out of which we got three lakh rupees as soon as we took the loan, but later it is necessary to understand how we will get twelve lakh rupees which will be the down payment.

Interest rate  Rate Of Interest) – borrower should get out of the interest rate. We should know, at what rate interest is being charged. And find out the interest in different banks. Many times it has happened that people have to pay more interest than the principal. If the money is not paid, then interest is charged at compound rate.

A storage monthly installments Equal Monthly Installments (EMI)) –  is a process for him to pay back the loan, which according to their income is Bnwani installments every month, called EMI. In which the amount of both principal and interest is added. And it has to be paid every month according to the installment made or it is deducted from the amount deposited in the bank account.

Age (Age)  is seen as the age of the loans Joan is also the person taking the loan, his age should have to repay the loan.

Process to Apply For Small Business Loan in India

  • To process the loan in the first step, bring the form from any bank, read and understand it thoroughly and then fill it.
  • Collect all the documents in it together and attach the photo copy of every document, do not attach the original copy of any document with it.
  • The two guarantors that we are taking for signing should be trustworthy, so that no problem may arise in future.
  • Whatever immovable property we are keeping as security, we should also find out the market value of it.
  • After taking the loan, understand the time period from the bank for the down payment and ask for it according to your need.

Benefits of business loans and losses (Profit & Loss Of Business Loan) –

Business Loan Benefits – No person has to think about business, all his problems end by taking a loan, its benefits are as follows-

  • To start any business, one does not have to think about capital or it, work can be started easily with loan. It helps in meeting all the expenses related to business.
  • Loans are available at a lower interest rate than the market rate. Which gives the advantage of big capital at low cost. And can be used for a long time. The minimum repayment tenure of the loan is at least one year and the maximum tenure is up to five years. According to the time, every year there are some changes in it, which is necessary to see.
  • After starting the business, the work can be carried forward comfortably with the down payment (advance payment). And the capital rotation works fine.
  • The more capital there is, the more loss there is. Loans are easily available from every company and bank.
  • Its benefit is also available in income tax. We can also take advantage of loan exemption while filing income tax return.

Business Loan Drawbacks  – If the loan is taken without planning and is not repaid on time, then it also has to bear the loss, it is as follows-

  • The biggest disadvantage of taking a loan from a bank is that the interest rate is very high. Which is more expensive than the original.
  • After the down payment of the loan, it takes a lot of time and its amount is easily available in small installments.
  • If the loan amount is not repaid, the property gets auctioned.

Business Loan Interest Rate –

Every bank has its own different interest rate, which is very difficult to understand, here we are telling the rates of some banks together, which will make comparison very easy.

names of banks interest rates
allahabad bank 11.10%
Andhra Bank 15.75%
Bank Of Baroda 14.10%
Bank Of Maharashtra 14.50%
City Bank 15.99%
corporation bank 13.55%
Dhan Laxmi Bank 13.15%
HDFC bank 15.50%
ICICI Bank 15.50%
IDBI Bank 13.00%
Indian Overseas Bank 14.90%
Kotak Bank 16.00%
Punjab National Bank 12.65%
State Bank Of India 11.20%
Syndicate Bank 12.50%
United Bank Of India 13.00%
This bank 16.25%

Every year there is some change in the rates of this bank interest. Whenever you want to take a loan, definitely find out the rate of interest for that year, then process the loan.

Prime Minister’s Employment Generation Program Prime Minister’s Employment Generation Programme) (PMEGP)   is for small business under the Prime Minister’s plan went to arrange a loan, which can trade it is thinking of Every Person Joan trade.

Key points of this plan –

  • People above the age of eighteen years and less than thirty-five years of age can participate in this scheme.
  • The family whose income of all the members together is less than twenty four thousand, they can take advantage of this loan.
  • In this loan, the government has almost removed the barrier of literacy, 8th to 10th pass person can also take this loan.
  • The government has fixed the minimum limit of this loan up to two lakhs and the maximum limit is up to twenty five lakhs. In which the important point is that there is no need to keep any property as security. And this loan will be available for at least seven years.

What are the benefits of taking a business loan?

  1. cash inflow
  2. money support for business needs
  3. Fulfillment of financial needs for both short and long term

Pradhanmantri Mudra Yojna) – This plan is the government or kept for all those individuals who want to do business who would like to expand. In this scheme also, the government has taken special care of the convenience of the people and loan will be given without taking any guarantee in it. With this, no fee will be charged for any kind of loan process. A sufficient period of five years has been kept for its repayment. The government has divided this loan into three parts.

In government loan, all other documents will be same as in normal loan. But in this, it is mandatory to give caste certificate, residence certificate, address of the place of business.

The government started this facility to eliminate unemployment and similarly taking loan helps a lot in doing business. And every person who plans and does business, he will definitely get profit and there will be progress in business.

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