Get online business loan in 7 Easy Steps

India is a country of start-ups. As per the government of India’s data, the country has over 77000 start-ups distributed across 656 districts. Most of these start-ups are Small and Medium Enterprises (SMEs). Running these businesses requires money, and your business may suffer if you don’t have much money. 

So, if you plan to start a business or expand your existing one, you may apply for an online business loan. These business loans are slightly different from personal loans. So, let’s see a business loan and how to get one online. 

What is a Business Loan? 

A business loan is a type of loan that can be only used for business purposes. You can use this loan to cover your direct business requirements, including operational costs, purchase supplies, and other business expenses. 

One of the benefits of a business loan is its repayment period is longer than a personal loan. Moreover, with a business loan, you get more capital at a lower interest rate compared to a personal loan. 

How to get a Business Loan online? 

Like any other loan, you can get an online business loan from any bank or NBFC. However, depending on your eligibility, the terms and conditions of the loan vary from lender to lender. Based on the lender you choose, the online business loan could be secured or unsecured. 

You must fulfil some eligibility criteria to get the loan for your business. These are the general criteria checked by all lenders. 

• You should be either self-employed, working professionally, or an entity. 
• The entity means partnerships, LLPs, private limited companies, closely held companies, and so on. 
• A minimum required turnover. 
• A minimum business experience in the market. 
• You must be between 22 to 60 years of age (at the time of maturity of the loan). 
• You must have an excellent CIBIL score.

Documents required for a business loan

Before applying for an online business loan, make sure you have these documents. 

• The PAN card of the individual or company, or firm
• An identity proof, preferably an Aadhaar card
• Address proof 
• Bank statement for the last 6 months 
• Recent IT returns with proof of income. For example, in the case of a company or firm, you would require the balance sheet and profit and loss account for the last 2 years
• A certificate of business continuation for 2 years
• Documents related to ownership of the company or partnership deed
• Memorandum of Association and Articles of Association

So, once you have collected all these documents, it’s time to apply for an online business loan. If your business comes under the Micro, Small, and Medium Enterprise sectors, you can get a loan under start-up business loan schemes for MSMEs and start-ups. 

The Government of India (GoI) has started distributing loans directly to start-ups and MSMEs through the Small Industries Development Bank of India (SIDBI). The interest rate on these loans is lower by 300 basis points than the loans offered by other banks. 

All these loans are sanctioned online, and you need to visit the website of SIDBI to apply. Or you can also get an n by visiting the respective bank’s website or NBFC. 

Here are the steps to apply for an online business loan. 

Step 1: Go to the respective website of the bank or NBFC. 

Step 2: Locate the loan section and business loan under it. 

Step 3: Open the application form and complete all the required details. 

Step 4: Apply to attach all documents. 

Step 5: A representative from the bank will reach out to you if you miss any details or required information. 

Step 6: The application will go for a loan verification procedure. If everything goes well, your loan application will be approved. 

Step 7: The money will be credited to your account after the successful approval.  

Types of Online Business Loans 

There is no one-size-fits-all for loans. So, depending on your capital requirement and business type, you may go for any of these online business loans.

• Term loan: This is the most common type of business loan. The term for this loan ranges from one to five years. This type of loan is specially sanctioned for covering business expenses. Moreover, you will need to specify the purpose of use. 
• Start-up loan: As the name suggests, it is sanctioned for start-ups to cover their operational expenses. However, this loan requires a minimum establishment period. It means this loan is only for start-ups already in the market for a particular time. The terms and conditions of this loan depend upon the expected turnover of the company. 
• Invoice Financing: This loan is mainly for small businesses. The purpose of this loan is to fill the gap between putting up invoices and receiving payments. Banks provide this loan against the raised invoice. 
• Working Capital Loan: This loan is sanctioned to manage the temporary financial crunch. This type of loan also covers the operational cost during the seasonal increase in demand. 
• Equipment Financing: You can also get a loan for purchasing equipment and machinery. This type of loan is suitable for manufacturers of various kinds of goods. Under this loan, the machinery brought from the loan amount is treated as collateral. 
• Loan against property: As the name suggests, this loan is sanctioned against your property. The property is kept as collateral, and the tenure for this loan ranges from 10 to 20 years. 

Conclusion

In 2022, getting an online business loan will be more accessible than ever. However, each lender has different criteria and interest rates. As a result, some NBFCs take undue advantage of small businesses and provide them with loans at very high-interest rates. 

You can get a business loan from Piramal Finance at a reasonable interest rate. Besides, you can get more financial education from our blog so that no one can take undue advantage of you.