Business Loan

Business Loan

A business loan is a type of financing offered to entrepreneurs, startups, and established businesses to meet their financial needs—whether for expansion, working capital, purchasing equipment, hiring staff, or managing day-to-day operations.

Unlike personal loans, business loans are specifically designed to support the growth and sustainability of a business. They can be secured (backed by collateral) or unsecured (no collateral required), depending on the loan amount, credit history, and business profile.

At P M Associates, we help you find the right business loan from top financial institutions with competitive interest rates and flexible repayment terms—tailored to your business goals.

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Features and Benefits of Business Loan

Business loans come with numerous benefits and features to help borrowers cope with financial obligations. The following are a few features that you unlock when you count on a business loan:

  • Fast Disbursal: Generally, business professionals apply for a business loan when they need instant access to funds. One of the best parts of a business loan is that it comes with quick disbursal. You don’t have to wait for months to access funds. The amount is disbursed within 3 to 5 working days.
  • Minimum Documentation: One of the foremost features of a business loan is the minimal documentation requirement. Banks and finance companies process business applications with little documentation. No hectic paperwork is required. With the online business loan application process, you get the option to submit a scanned copy of the documents, that’s all.
  • Competitive Business Loan Interest Rates: Banks and financial institutions offer business loans at attractive interest rates. Debtors can get commercial loans without higher monthly repayments.
  • No Prepayment Charges: Prepayment of business loans is permitted without additional fees or charges. However, this may vary from one bank to another.
  • Flexible Repayment Tenure: In general, banks and financial providers offer business loans with flexible repayment tenure. You can choose your repayment tenure as per your choice. However, don’t forget that a longer repayment period results in an increased payable interest component.
  • Collateral-Free Loans: The availability of unsecured business loans allows you to get collateral-free business loans. Such loans are time efficient and can be easily accessed without pledging any commercial or personal assets.

Business Loan Eligibility Criteria

Banks and finance providers have preset business loan eligibility criteria. To procure a commercial loan with the utmost ease, stick to the following eligibility criteria:

  • Applicants must follow the RBI’s definition of Micro and Small Businesses.
  • The sole purpose for obtaining a business loan (working capital, business expansion, or the purchase of machinery or equipment) must be specified.
  • A personal guarantee is required. This will necessitate the main partner to act as a loan guarantor.
  • The company must have been in operation in the same domain for at least three years.
  • Financial papers, such as audited financial accounts, are unavoidable.
  • Tax audit report (last 2 years).
  • Bank statement of the business account (last 6 months).

Documents Required for Business Loan

General Documents

  • Form and Photographs: Duly filled business loan application form and 2 passport size photographs.
  • Proof of Identity: PAN card, passport, Voter ID card, MAPIN Card or driving licence.
  • Residence Proof: Voter ID card, ration card, utility bills, including electricity bill, telephone bill, Aadhaar card or lease agreement.
  • Age Proof: Voter ID card, Aadhaar card, PAN card or passport.
  • Financial Documents: Income Tax Returns for the last 2 years, balance sheet audited by a certified Chartered Accountant (CA), profit and loss statement (2 years), along with a statement representing the business transaction.
  • Proof of Income: Bank statement of business account as well as the personal account for the last two years.
  • Proof of Business Ownership: Documents including the declaration of a sole proprietorship, a copy of the memorandum along with the articles of association will be required.

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FAQ :-

What is a business loan?

A business loan is a type of financing provided to business owners to help with operations, expansion, purchasing equipment, or managing cash flow. It can be either secured (with collateral) or unsecured (without collateral).

How much business loan can I get?

Loan amounts typically range from ₹1 Lakh to ₹1 Crore or more, depending on your business revenue, profit margins, credit score, and repayment history.

Do I need to provide collateral?

Not always. Unsecured business loans are available for eligible applicants. However, larger loan amounts or high-risk profiles may require security in the form of property, equipment, or other assets.

What is the interest rate on business loans?

Interest rates vary between 11.5% and 24% per annum, depending on your business profile, credit history, loan amount, and lender policies.

What is the repayment tenure?

You can choose a repayment tenure between 12 months and 60 months. Some lenders also offer flexible repayment plans or overdraft facilities.