How to Take a Business Loan: Complete Step-by-Step Guide

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Business Loan 2025

Starting or growing a business often requires more funds than you currently have. This is where a business loan comes in. Whether you’re looking to expand your operations, purchase new equipment, or manage cash flow, a business loan can provide the necessary financial support.

In this guide, we’ll walk you through how to take a business loan in India (or globally, with similar steps), including eligibility, documentation, loan types, and how to apply successfully.


What Is a Business Loan?

A business loan is a financial product offered by banks, NBFCs (Non-Banking Financial Companies), or online lenders that provides capital for various business-related purposes. These loans can be secured (with collateral) or unsecured (without collateral).


βœ… Types of Business Loans

Before applying, it’s important to know which type of business loan suits your needs:

  1. Term Loans – Lump sum loan repaid in monthly EMIs over a fixed term (1–10 years).
  2. Working Capital Loans – For day-to-day operational expenses.
  3. Equipment Financing – For purchasing machinery, vehicles, or IT equipment.
  4. Business Line of Credit – Flexible credit line with interest only on the amount used.
  5. Invoice Financing – Advance money against unpaid customer invoices.
  6. Start-up Loans – For new businesses or entrepreneurs with limited credit history.
  7. Government Schemes – Like MUDRA, Stand-Up India, CGTMSE, etc., for MSMEs.

πŸ“ Business Loan Eligibility Criteria

While eligibility may vary by lender, general criteria include:

  • Age: 21–65 years
  • Business vintage: Minimum 1–3 years of operations
  • Annual turnover: β‚Ή10 lakhs to β‚Ή1 crore (varies)
  • Credit Score: 650 or above (for unsecured loans)
  • IT returns: At least 1–2 years’ worth
  • Business registration: Must be valid (GST, shop license, Udyam Registration, etc.)

πŸ“ƒ Required Documents for Business Loan

To apply for a business loan, you’ll need to submit:

  1. KYC documents (PAN, Aadhaar, Passport, etc.)
  2. Business Proof (GST Certificate, Udyam registration, partnership deed, etc.)
  3. Bank statements (Last 6–12 months)
  4. Income tax returns (Last 1–2 years)
  5. Financial statements (P&L, balance sheet)
  6. Loan application form
  7. Photographs of applicant/owners

For secured loans: property papers, collateral documents are required.

Also Read :-Home Loan in 2025: Complete Guide to Buying Your Dream Home Smartly


How to Apply for a Business Loan (Step-by-Step)

Step 1: Assess Your Need

  • Determine loan amount, repayment capacity, and loan purpose (e.g., equipment purchase, hiring staff, office expansion).

Step 2: Compare Lenders

  • Compare interest rates, tenure, processing fees, and flexibility.
  • Popular lenders include SBI, HDFC, ICICI, Axis Bank, Bajaj Finserv, Lendingkart, and others.

Step 3: Check Eligibility & Credit Score

  • Use lender’s eligibility checker tools online.
  • A CIBIL score of 700+ increases your chances for an unsecured business loan.

Step 4: Prepare Documents

  • Gather all required documents (as listed above).
  • Organize financials, projections, and business plans, especially if you’re a startup.

Step 5: Submit Application

  • Apply online through the lender’s portal or visit the nearest branch.
  • Fill in the application form, upload documents, and verify via OTP or physical submission.

Step 6: Verification & Approval

  • Lender will verify documents, check business health, and creditworthiness.
  • This process may take 2 to 7 working days.

Step 7: Loan Disbursal

  • Upon approval, the loan amount is disbursed to your business account.
  • For term loans, repayment begins as per EMI schedule. For working capital loans, funds are withdrawn as needed.

Tips to Increase Your Business Loan Approval Chances

  • Maintain a clean credit history.
  • Keep accurate financial records and audited balance sheets.
  • Choose a realistic loan amount based on your repayment ability.
  • Prepare a detailed business plan showing revenue potential.
  • Apply under government schemes for lower interest and relaxed terms.

πŸ“Š Business Loan Interest Rates & Charges (2025 Average)

Loan TypeInterest Rate (Per Annum)TenureProcessing Fee
Term Loan10% – 18%Up to 5 yrs1% – 2%
Working Capital12% – 19%12–24 months1% – 2.5%
Govt. MSME Loans7.5% – 12%VariesMinimal

Final Thoughts

Getting a business loan is no longer a complex or daunting process if you’re prepared. Whether you’re running an SME, starting a new venture, or scaling operations, a business loan can give your company the momentum it needs.

Compare your options, prepare your paperwork, and apply with confidence.

Read More :- How To Apply Personal Loan? How To Take Loan ?

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