Business Loan in Faridabad

Faridabad is a satellite city of Haryana and a part of the National Capital Region (NCR). Faridabad is an industrial hub and is famous for its Henna production and many other household items and automobiles.

Two major National Highways pass through Faridabad, which are the Delhi-Agra National Highway and the Delhi-Mathura National Highway. The Yamuna River also flows on the eastern side of the city.

Faridabad is located 25 km. from Delhi and has a robust civic infrastructure. There are many SMEs in Fairdabad who are engaged in manufacturing and service sectors.

If you are looking for business loans in Faridabad due to expansion of business or procurement of plant & machinery, read on to know the eligibility and documentations required.

What is a Business Loan?

Business loans are the financial support offered by banks and NBFCs to businesses to help them meet their capital needs. Business loans can be used for scaling a new business or for kick-starting a new venture all together.

Business loans fulfil production and expansion goals of a business by providing them with the capital to do so. Business loans are provided by banks and Non-Banking Financial Institutions (NBFCs) online as well as offline through a branch office.

Individuals can avail secured loans or unsecured loans. Secured loans are loans granted against a collateral, typically a mortgaged property or any other asset of the applicant. On the other hand, unsecured loans are the ones where no collateral or guarantor is required for the loan.

Business loans are nowadays becoming increasingly customized to fulfill the needs of a particular business.

Though the loan amount, tenure and interest may vary depending on the scheme opted for, they tend to be more or less as follows:

Interest rate

Starts at 11.90% p.a.

Loan amount

Min: Rs. 50,000/-, Max:Rs. 2 crore

Repayment tenure

12 to 60 months

Benefits of business loans

Business loans are a means for business to leverage when they do not have the capital necessary to achieve their goals.

Business loans maybe beneficial to a business in the following ways:

1. Business growth:

Businesses need to scale up after a certain point. But for expansion, it needs the capital to do so. This is where business loans can help SMEs scale-up their production capacity or business presence.

2. Increase working capital:

Businesses need working capital to carry out their day-to-day operations. In case of a shortage of working capital, a loan towards the same can provide the funds that the business to operate smoothly.

Purchase of equipments:

Plants and machineries depreciate in value every year. After many years, it may hamper production or increase its price. Therefore, it is necessary to upgrade your machinery after every 10 years or so and install new ones that improve efficiency. Business loans can help you with upgrading your plant and machinery.
Learn more: Machinery Loan

Purchasing inventory:

Sudden market fluctuations may see prices of raw materials rise, which can be inconvenient for businesses who require urgent materials for production to meet the increased demand. Business loans are a viable option in such circumstances.

Improve credit history:

Obtaining a business loan and paying the due instalments on-time will also help to increase the credit score of the business.

Business loan eligibility

Lenders have certain stipulated criterias that the applicant and their business ha e to meet before they are granted a business loan. These guidelines vary from one lender to another, but the first and foremost common ground is the credit profile and CIBIL score of the applicant.

The applicant has to submit financial documents of the business to show performance of their enterprise in the recent past couple of years. The lender basically looks into the credibility and repayment capability of the business before they grant a business loan.

These documents also help ascertain the loan amount that the lender would sanctio  to the applicant, along with the rate of interest applicable and term of the scheme. The lender also reserves the authority to refuse a business loan if your business does not fulfil any of their criteria.

Some general criterias taken into account are:

1. Nationality of the applicant:

The applicant should be an Indian national with a permanent residence in India.

2. Employment

The Applicant should be self-employed with at least3 years of business experience.

3. Age limit

The applicant should be at least 21 years of age during loan application and not more than 65 during maturity of loan.

4. Financial history:

The applicant has to furnish information on business turnover along with the IT returns for the past 3 financial years

5. Business history:

The Business should be running with profits for the last 2 years at the minimum.

Documents required to apply for a business loan

Following are the documents required to apply for a business loan:

Identity Proof

Aadhar Card, Voter ID, Driving Licence, etc.

Address Proof

Voter ID, utility bills, etc.

Bank Statement

For the previous 6 months

Proof of Business

Licences/registrations/approvals

Financial Documents

Business Income Tax Certificate, Balance Sheet, P/L statement.

Business loans in Faridabad

There are many banks and NBFCs in Faridabad that offer business loans to SMEs. Banks have more stringent criterias for providing loans to businesses than NBFCs, though they charge a lower rate of interest from businesses.

Banks offer unsecured loans to businesses with a CIBIL score of 650 or above. NBFCs generally grant collateral-free loans, but charge a higher rate of interest in return.

These are some loans offered by lenders to businesses in Faridabad:

  1. Term loan
  2. MSME Loan
  3. Mudra Loan
  4. Working Capital Loan
  5. Letter of credit
  6. Invoice funding
  7. Micro lending
  8. Merchant cash advance
  9. Small Business Finance

You can check for business loan online as well and compare to find the best plan for your business.

Steps to apply for a business loan

Business loans can be availed online as well as through the offline channel.

Online:

  • Visit the official website of the bank or NBFC
  • Select the business loan of your choice
  • Download the application form and fill in the details
  • Submit the application form along with soft copies of official documents
  • The application and documents will be verified by the lender
  • If approved, the loan amount will be deposited in the applicant’s bank account within 5 working days.

Offline:

  • Visit the nearest branch of the lender
  • Procure the business loan application form
  • Fill in the details and submit all required documents
  • Lender will verify the information and documents
  • Lender will disburse the loan amount if the applicant is found to be eligible.

Benefits of Business loans

There are numerous benefits when it comes to applying for business loans. Some of them are:

1. Easily available

Business loans are offered by almost every bank and NBFC to support start-ups and enterprises in their journey towards growth. Even if someone cannot meet the CIBIL threshold to qualify to a loan, they can still approach NBFCs who have more relaxed criteria for business loans.

2. Helps in managing the business

As mentioned earlier, every business requires capital to function. These loans can be used to expand a business or its area of operation and gain a competitive edge in the market. Moreover, most lenders do not require businesses to spend the funds in a specific way, leaving them with complete freedom to allocate the funds as per their own needs.

3. Hassle-free application process

Business loans require minimum documentations and involve a hassle-free process for loan application.

4. Flexibility in repayment

Business loans can be paid as preferred by the borrower. They have the option to either pay as a lump sum, in instalments or get their EMI reduced.

 5. Tax benefits

Borrowing a business loan also offers tax benefits to the borrower, like interest paid on the principal amount is subject to tax deductions.

Business Loan in Faridabad FAQs:

1. What is the lowest rate of interest on a business loan in Faridabad?

The lowest rate of interest for a business loan in Faridabad is 14%*. *interest rate is subject to change

2. How long does it take to get a business loan in Faridabad?

It usually takes up to 10 working days for the loan amount to be credited in your account in Faridabad.

3. How much business loan can I borrow without providing a collateral?

You can borrow a business loan up to 80% of your free cash flow (assets after all liabilities are paid-off).

4. Can I get a business loan without any income?

Generally, banks and NBFCs do not grant loans to individuals without any source of income. You will have to convince the lender regarding the repayment, or your ability to repay the loan amount along with interest. This can be achieved by a novel business idea or considerable possession of assets.

5. What is the minimum CIBIL score for getting a business loan?

Minimum CIBIL score for getting a business loan by banks in India is 650 or higher. You can get equipment financing or business lines of credit at 630, while merchant financing option is also available for individuals with a CIBIL score of 550.

6. Is it hard to get an unsecured business loan?

As a general rule, unsecured loans are harder to get due to the risk factor being higher. The eligibility criteria thus for unsecured loans are much stricter. Alternatively, you may approach an NBFC for unsecured loans as they have relaxed rules for business loan eligibility.

7. Can a LLC company get a business loan?

LLC can get a business loan, though they may be needed to pledge a security or provide a personal guarantee.

8. What is the maximum amount that one can avail as a business loan?

In India, you can generally get a business loan up to Rs. 2 crore.

9. What is the repayment tenure of business loans?

Repayment tenure of business loans in India is up to 60 months.

10. How can I calculate EMI for my business loan?

You can easily calculate EMI for your business loan using the EMI calculator online. Most lenders have EMI calculators in their website for applicants to have a fair knowledge of the true cost of a loan.