Steps to Getting an Entrepreneur Business Loan in India

Are you applying for an entrepreneur loan in India in 2022? Want to know more about what an entrepreneur loan is, what its benefits are, who should apply for one, etc.? Then, this article is the right place for you to dive in. 

In this article, you will get to know the actual meaning of an entrepreneurial business loan, its features and benefits, the eligibility criteria, and how to apply for it. 

Features of an Entrepreneurial Business Loan

An “entrepreneur loan” is a type of loan that is only sanctioned to business companies and startups for meeting their business expenses. With an entrepreneur loan, you can take out a loan to invest in your business venture in order to improve the quality of your goods, buy new technology, invest in your infrastructure, etc. Since entrepreneurship is on the rise in the 21st century, these types of loans are frequently taken. 

The lender doesn’t require any type of collateral or security deposit while giving you the loan. For small, emerging business ventures, banks provide business loans to help them increase their market value, shares, profit margin, etc. In exchange, you must repay the debt in installments over a specified period of time.

Benefits of an Entrepreneur Loan

Here are some of the exclusive benefits of taking a business loan:

• Less burden while paying instalments

When you apply for a business loan, banks frequently offer the tailoring option to reduce your burden while repaying the instalment. There is an option called the Flexi facility, which reduces the burden of monthly instalments and will help you pay off your debt easily. 

• No requirement for collateral

Banks don’t ask you for collateral or a security deposit while you’re applying for an entrepreneur loan. This is another advantage to help you skim through it in case you lack a property or shares to use as collateral. 

• High loan amount

Many banks allow you a higher limit of up to Rs 50 lakh, which is a huge amount for business startups. This amount solely depends on how well your business is supposed to do in the future. If you have a good scope and a promising future in the venture, you are more likely to get a handsome amount as a loan. 

• Low-interest rates

Interest rates on business loans are comparatively lower, and a low rate of interest is all that you need. The range is somewhere between 15% and 20% per year, which is reasonable for an entrepreneur loan.

• Quick disbursal

Another advantage is the quick disbursal of money in an entrepreneur loan. As soon as you get access to the amount, you can use it to buy assets for your business or invest in goods. 

• Quick approval

The approval period is also pretty fast for an entrepreneur loan, which is mostly within 1 to 2 days. If you have good prospects and your venture has a promising future, you can even get approved in less time than that. 

• Long repayment tenure

The repayment tenure on an entrepreneur loan is mostly 5–8 years, depending on the bank. In some cases, the period goes up to 10 years or even 12 years, which means you will have ample time to repay your loan. 

• Pre-approved offers

You might even get pre-approved offers if the banks know that you have a business that is going to do well in the near future. Another reason for getting a pre-approval loan could be your clean credit history and excellent credit score. 

Eligibility Criteria for an Entrepreneur Loan

Here are the eligibility criteria that you must fulfill to apply for an entrepreneur loan:

Age limit

You must be at least 21 years old to apply for a business loan and be under 65 years old. Some banks start at 25 years, while some close before 60 years, which remains highly subjective. 

Minimum turnover

To qualify for any type of business loan, your company must have a minimum annual turnover of around Rs. 40 lakhs. This amount again depends on the bank where you apply, but Rs 40 lakh to Rs 50 lakh is the benchmark requirement. 

Business type

Either you can be a person who is self-employed, a proprietary individual, or you can have private companies or partnership firms that are dedicated to manufacturing, trading, or providing services. Nuanced business ventures are taking over traditional business these days, which is why banks look for these types of businesses.

Business experience

The total business experience of the individuals in the current business must range from 3 to 5 years if you are looking to apply for an entrepreneur loan. Make sure that you are currently in the same business for which you are applying for a loan. 

Minimum annual income

Your business, for which you are applying for a loan, must earn at least Rs 1.5 lakh per year. This is the minimum requirement to qualify for any type of business loan. 

Things to Keep in Mind While Applying for an Entrepreneurial Business Loan

You should always attempt to improve your marketplace, which will have an impact on the minds of the lenders. You should make sure that your business has a high value and is going to make good profits in the near future. 

Another thing is improving your business experience as much as you can. Since an entrepreneur loan is still a debt, you should invest wisely in it to make good profits and take your business to the next level. 

Summing Up

Business loans in India are on the rise because of the emergence of various startups. Government schemes have also shown up, which have helped over 39,000 business startup ideas scale up. 

If you like reading articles and blogs on these topics, you should make your way to Piramal Finance. The blogs on this website are filled with information regarding investment, finance, SIPs, loans, etc.