Business Loan in Patiala

Patiala is a district headquarter in the Indian state of Punjab, known for its resounding architectural works and its cuisines, culture, garbs and folk songs.

Made famous by Maharaja Bhupinder Singh, Patiala has now become a modern metropolis with all 21st century facilities of an urban city. It is also a famous tourist destination attracting scores of tourists every year to witness its heritage and monuments.

Punjab is a major agricultural hub of the country with the state making up much of the GDP in the sector. There are also many other businesses thriving in the Northern Indian state.

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

What is a Business Loan?

Every business operating in profits has to scale up someday. But for growth, the business would need sufficient capital or funding, whether it is working capital requirement or for upgrading the machinery for enhancing production capability.

As such, business loans are the amount disbursed by banks and NBFCs to companies that are looking towards growth.

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.

Business loans are of two kinds:

  1. Secured loans: Secured business loans require collateral from the borrower to be pledged against the amount borrowed. These are called secured loans because the risk of default is low.
  2. Unsecured loans: Unsecured loans are the ones which do not require any kind of collateral from the borrower. They are so called because the risk of default is high, for which the lender charges a higher rate of interest.

Business loans are becoming increasingly customized to meet the specific needs of different businesses.

Features and benefits of business loans

1. Up to Rs. 2 crore loan amount 

With a good credit history and performance of the business and depending on the requirements, business loans can be granted for an amount up to Rs. 2 crore. 

2. Repayment flexibility

Business loans can be repaid within 12 to 60 months, depending on the loan amount and rate of interest. 

3. Unsecured loans

If the applicant and the business meet the lender’s criteria, they can avail an unsecured business loan without providing any collateral or guarantor. 

4. Flexible loans

Business loans are often flexible in terms of repayment. The borrower can choose to repay the loan amount in whichever way he prefers.

5. Immediate approval

Upon fulfilling the eligibility criteria, business loans are quickly approved and disbursed by banks and NBFCs.

6. Minimum Documentations

Business loans often require minimum documentations

7. Helps achieve business goals

Business loans often help enterprises to meet their goals and objectives like expansion, increasing working capital, investment on inventory or machinery, or just creating a good credit history.

Business loan eligibility

Business loans are offered to any individual running a legitimate business with a profitable turnover.

Different lenders will have different eligibility criteria for evaluating a business. The applicant has to submit some documents which prove that his/her business is performing well and running in profits. Based on these documents, the lender decides the loan amount, tenure and interest rate.

These are some of the general criteria that lenders take into account:

1. Eligible entities

Business loans can be obtained by self-employed individuals, sole proprietors, limited liability partnerships, partnership firms, public and private limited companies, MSMEs, NGPs and Co-operative societies. 

2. Applicant age

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

3. Credit history

The applicant should have a good credit history and a CIBIL score of over 650. 

4. Nationality

The applicant should be an Indian citizen.

5. Business vintage and performance

The business should be in running for the past 2 years continuously with profits and should not be in any kind of debt.

6. Annual turnover

The annual turnover of the business will be decided by the lender.

Documents required to apply for a business loan

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

ID Proof

Aadhar, Passport, PAN card, Voter ID, Driving Licence

Address Proof

Passport, PAN card, Voter ID, Driving Licence, Electricity Bills

Bank statement

Last 12 month’s bank statement

Income statement

Tax invoices for the past 2 years, payslip for the last 2 months, bank passbook, Form 16

Proof of business ownership

Rent agreement, Sale Deed, Lease Documents, Registration and incorporation certificates, trade licences.

Business loans in Patiala

Being an economically important city in Punjab, there are many banks and NBFCs lending business loans to entrepreneurs in Patiala. You may approach any institution as per your choice, but it is advisable to understand the financial needs of your business, compare the best business loans and then select the one which will help you achieve your goal.

Banks offer a lower rate of interest but have stringent criteria for business loan eligibility. NBFCs are more flexible with the eligibility and are more likely to disburse loans to individuals with relaxed criteria but charge a higher rate of interest.

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

  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

Steps to apply for a business loan

You can apply for business loans in Patiala online

Online:

  1. Visit official the website of the lender
  2. Select your preferred business loan
  3. Download the application form and fill in the details
  4. Submit the application form 
  5. The application will be verified by the lender
  6. If the loan is approved, the amount will be credited to the applicant’s account in 10-15 working days.

Business loans in Patiala FAQs:

1. Do I need to have an existing business to get a business loan?

Business loans are granted for expansion of existing businesses and also for start-ups. The eligibility criteria and particulars of the loan would differ from lender to lender.

2. Who can apply for a business loan?

Parameters for granting business loans includes the following: 1. Type of business,2. Business turnover, 3. Cash Flow of the business, 4. Profit made by the business, 5. Credit record of the business

3. Who is eligible for a business loan?

Business loans can be obtained by self-employed individuals, sole proprietors, limited liability partnerships, partnership firms, public and private limited companies, MSMEs, NGOs and Co-operative societies.

4. What is the least amount one can borrow as a business loan?

Business loans start from Rs. 50,000/- and may reach up to Rs. 2 crore if the business is promising. Some NBFCs and banks in rural areas may also grant business loans as low as Rs. 30,000/-.

5. Is there a penalty levied for non-payment of EMI on time?

Yes. A penalty fee will be levied if you miss the EMI payment on the due date. Upon successive non-payments of EMI, the lender may initiate strict actions against the borrower including legal measures.

6. What is the credit score needed for a business loan?

The minimum credit score of the applicant and the business should be 650. A credit score of 680 or higher will give you better chances in getting a business loan.

7. What is the repayment tenure of a business loan?

The repayment tenure of business loans is 12 months to 60 months.