Business loans
A business loan is a term loan for a specific purpose — opening a new outlet, renovating, buying stock in bulk, or funding growth — repaid in EMIs over a fixed period. Unsecured business loans are quick but costlier; secured ones need collateral and take longer. Lenders judge the business first and the owner second.
We explain what lenders usually ask for and help you get your papers in order — the first call is free.
Estimate your EMI
EMI calculator (estimate only)
Enter the amount, the yearly interest rate and the number of months. The estimate uses the reducing-balance method that most banks use for term loans.
Estimate only. Your lender sets the actual rate, EMI and charges.
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Details
What lenders usually check
- How long the business has run — many lenders want two or three years.
- Turnover and profit from ITR, financial statements and GST returns.
- Bank statements: regular credits, no bounced cheques or overdrawn days.
- Existing loans and how they have been serviced; the owner’s and the business’s credit records.
- The purpose and whether the cash flow can carry the new EMI.
Documents to keep ready
- Owner’s identity and address proof; PAN of the business and the owner.
- Business proof: registration, GST certificate, MSME registration certificate, shop licence or partnership deed / incorporation papers.
- ITR with computation for the last two or three years; audited or CA-certified financials where applicable.
- GST returns for the last year.
- Bank statements for the last six to twelve months.
- For secured loans: papers of the collateral.
Repayment
Monthly EMIs, typically over one to five years. Some lenders allow a short moratorium at the start. Bounced EMIs are reported to both the consumer and commercial bureaus.
Interest and charges
Unsecured business loans carry higher rates than secured ones. Ask about processing fee, prepayment charges, and whether the rate is fixed or floating.
Security or own contribution
Unsecured up to a lender-set amount; above that, collateral (property, deposits, machinery) or a guarantor. Some government-backed guarantee schemes cover loans to eligible MSMEs without collateral; ask the bank which apply.
How to prepare
File returns on time. Route business receipts through the business bank account. Prepare a one-page profile of the business and a simple cash-flow sheet showing how the EMI will be paid. Keep GST and bank records consistent with each other.
Questions about business loans
Can a new business get a loan?
Harder. Most lenders want a trading history. Government schemes for new enterprises exist; ask your bank.
Do I need collateral?
Not for smaller unsecured loans if the business’s cash flow and records are strong. Larger loans usually need security or a guarantee-scheme cover.
Is a business loan the same as working capital?
No. A business loan is a fixed amount repaid in EMIs. Working capital is a revolving limit for day-to-day needs. See Working Capital and Cash Credit / Overdraft.
Does my personal credit score matter?
Yes. For proprietors and partners it is read alongside the business’s record.
What do lenders mean by "banking"?
The pattern in your bank statements — average balance, number and size of credits, cheque returns. It is one of the strongest signals for small-business loans.
Can I prepay?
Usually, after a minimum period, often with a charge. Check before signing.
How is a proprietorship treated differently from a company?
For a proprietorship the owner and the business are the same borrower; for a partnership or company the entity borrows and owners usually give personal guarantees.
What we do here: we explain what lenders usually ask for and help you get your documents in order. We do not lend, arrange loans or take commission. The first call is free. See what we do.
