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Availing a business loan in India – steps to grow your small business In India

An entrepreneur needs to manage various aspects of the business loan in India such as marketing, product development, financing etc. In this article we will try to help an emerging entrepreneur with his financing problem. Helping the entrepreneur in availing a business loan
Obtaining a Business loan could be the perfect solution for small businesses. They provide solutions to a variety of problems such as meeting working capital requirements, paying salaries, purchasing goods etc. Business loans are very flexible and can range from 3 – 5 years.

One of the most important factors while obtaining a business loan is checking the interest rate applicable. Due to rising inflation the reserve bank of India has increased lending rates by 75 base points. The EMI of the loans costlier

Factors that affect business loan in India interest rate

business loan in India

Collateral involvement

Obtaining a business loan in today’s competitive market has become easier as financial institutions are providing loans without collateral. But this could increase the interest rate if the institution fells that it could be difficult to recover the amount from the business. Hence if the business requires a low interest rate and it has an asset available it could always put it up for collateral.

Base rate system followed

The repo rate is considered as the base rate while lending by various financial institutions. Hence the recent hike in the rates has increased. The amount of EMI that needs to be paid back to the institution while obtaining a business loan.

Factors to keep in mind while of getting a business loan in India

getting a business loan

Low credit score

A credit of score of 700 + is preferred by the financial institutions as it shows them that you are credit worthy and the chances. The business will default on the loan payment is very low . Therefore while applying for the loan we need to make sure. The business has not had any defaults while paying back any loans

Poor cash flow business loan in India

A good cash flow shows the businesses ability to meet short term requirements such a paying back a loan’ EMI.

Lack of necessary documents

To approve business loans, financial institutions require them to mandatorily provide a few business documents. These financial statements allow lenders to look at the overall financial health of the business. Based on which they determine the loan amount to approve. The following documents are generally required by the financial institutions for approval of loan

  • Balance Sheet for two previous years
  • Profit and Loss Statement for two previous years
  • Income tax return filed
  • Cash flow statements

Benefits in applying for small business loans online

small business loans online

Flexible Tenure

Loan for small businesses offers flexible loan repayment allowing you time and ease to repay. The loan amount without worrying about running short of time.

Hassle-free Loan with Minimal Paperwork

Customers who wish to apply for a small business loan online do not need to visit any branch or any office. They can fill up all the required forms online which makes the process of availing the loan very fast  

Quick Disbursal

After verifying all the documents submit by the customers the amount of the loan which is apply online is usually disburse within 24 to 48 hours  

Collateral Free business loan in India

Some online lenders also allow businesses to apply for a collateral free business loan provided they have a good credit score and they have a good financial and cash flowF history 

Tax Benefits in business loan in India

Small business loans in India are subject to tax deduction under certain sections of the Income Tax Act, 1961. Therefore, in addition to easing your financial burden with a business loan, you will save a significant amount of money as tax benefit


Getting a business loan is one of the easiest solutions for a business to solve its financing problems as loans are available without collateral. Since collateral is not required the process of getting a loan becomes faster as there is no need for any appraisal of assets. The loans now provided by financial intuitions are very flexible as well. They also provide tax benefits to the firm and also help in improving the credit rating of the business.




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