
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, weβll 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).
β Types of Business Loans
Before applying, itβs important to know which type of business loan suits your needs:
- Term Loans β Lump sum loan repaid in monthly EMIs over a fixed term (1β10 years).
- Working Capital Loans β For day-to-day operational expenses.
- Equipment Financing β For purchasing machinery, vehicles, or IT equipment.
- Business Line of Credit β Flexible credit line with interest only on the amount used.
- Invoice Financing β Advance money against unpaid customer invoices.
- Start-up Loans β For new businesses or entrepreneurs with limited credit history.
- Government Schemes β Like MUDRA, Stand-Up India, CGTMSE, etc., for MSMEs.
π Business Loan Eligibility Criteria
While eligibility may vary by lender, general criteria include:
- Age: 21β65 years
- Business vintage: Minimum 1β3 years of operations
- Annual turnover: βΉ10 lakhs to βΉ1 crore (varies)
- Credit Score: 650 or above (for unsecured loans)
- IT returns: At least 1β2 yearsβ worth
- Business registration: Must be valid (GST, shop license, Udyam Registration, etc.)
π Required Documents for Business Loan
To apply for a business loan, youβll need to submit:
- KYC documents (PAN, Aadhaar, Passport, etc.)
- Business Proof (GST Certificate, Udyam registration, partnership deed, etc.)
- Bank statements (Last 6β12 months)
- Income tax returns (Last 1β2 years)
- Financial statements (P&L, balance sheet)
- Loan application form
- 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 lenderβs 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.
π Business Loan Interest Rates & Charges (2025 Average)
Loan Type | Interest Rate (Per Annum) | Tenure | Processing Fee |
---|---|---|---|
Term Loan | 10% β 18% | Up to 5 yrs | 1% β 2% |
Working Capital | 12% β 19% | 12β24 months | 1% β 2.5% |
Govt. MSME Loans | 7.5% β 12% | Varies | Minimal |
Final Thoughts
Getting a business loan is no longer a complex or daunting process if youβre 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 ?