A business loan is a type of personal loan that is bought to furnish small business requirements or in need to raise working capital for proper functioning of enterprises. At the time of sanctioning business loans by the bank, the official authorities perform documents check on the entrepreneur professional profile as well as the project reports that convey the details of current and future prospective of business transactions. This also includes the cash flow statement and accounts mentioning gross profit of the business concern. To acquire a business loan there is no need to mortgage or collateral security. It is an unsecured loan and that is why, even the group member guarantee is not required against the purchase of business loan.
But, there is a basic point to understand that states that a business loan is established as personal loan only for individual concerns which is sanctioned to facilitate the purpose of executing small business affairs. It is not the status of the business that determines the process to get a business loan but it is all about the personal status of financial attributes or depends on the capacity and tenure of repayment.
A business loan means to encourage the growth of a business organization. It doesn’t mean to start or seeding a new business venture. No banking institution provides the business loan to new entrepreneurs or new business launch due to the property of risks attached to the startup.
In order to get a business loan you need to draft the complete documentation stating your credit history with other institutions. It is important to understand whether you are eligible for the loan or not as it depends upon the way you manage your personal financial values. Your business plan also works needful here as it states the financial statements of past years and planning of nature of business loan.
The best bank to get your business loan will be the same banking institution which is already dealing with your business. It is because this bank knows and understands past records, reputation and trust of your financial accounts and summary. This acknowledges your business behavior in the market and signifies the accurate sanctioning of a new business loan into a fast process of execution.All banking organization’s concern over the repayment of the loan and what can be better than dealing with the same bank.
What are available choices??
There are banks in India support the needs of small business entrepreneurs. Majorly all banking institutions facilitate business loan on the equivalent interest rates. Sometimes, it becomes hard to determine which bank is perfect to deal regarding a new business loan. There is an ICICI bank which guarantees 15 lac term loans without any collateral security. All you need to submit are the legitimate documents such as file of income tax return (3 years), personal identification documents and post dated cheques for repayment.
There is Oriental Bank of Commerce (public sector bank) that deals the same as of ICICI bank but it operates with slightly lower interest rate and that too without any collateral security. The OBC bank is good for entrepreneurs who are looking for business expansion plans. Those businesses which are running good and having profitable cash flows can get a business loan from OBC just by presenting the soundness of the business profile.
Citibank offers personalized business loans to reach many small business enterprises without demanding any collateral or past financial records. This bank does not deal in distribution costs with its customers while sanctioning a new business loan. On the other hand, there is HSBC which has updated its overdraft and other factoring services to assist small business organizations in terms to excel with growth.
Indian banks are currently operating with the flexible collateral based lending structures which are highly processed on the basis of cash flow statement of the particular business environment. Commitment by the entrepreneur stated via important documents also matters when it comes to realizing flexible business loans. Banks are now produced ready-made new business loans to cut on the processing time and functioning of other costs. There are known as pre-approved loans specially configured for the small business enterprises.
Best Banks that you must try
Best banks for your business loan in the current scenario will be the ICICI bank, Fullerton India, GE Money India, HSBC, Citibank and OBC.
- ICICI Bank also provides office equipment loans (minimum amount of Rs. 30,000) to business organizations (tenure of 12-36 months).
- Fullerton India facilitates its loan services for individuals and self-employed institutions (turnover of less than Rs. 2.5 crore – p.a.).
- GE Money India is offering loans on the basis of 16% interest rate for personal loans and 12% interest rate for home equity loans.
- HSBC India is fast in sanctioning immediate cash flow due to the availability of its factoring services. Most of the invoices are delivered within a day of submission and no collateral security is required.
- Citibank is offering quick loans without collateral security (up to Rs. 25 lac).
- OBC offers business loans up to Rs. 5 lac (without collateral) and Rs. 5-25 lac (collateral based on past records).