written by khatabook | November 11, 2022

How to Get a Business Loan in Bangalore? Check Eligibility & Documentation

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Table of Content


Bangalore is home to many small and medium enterprises. A business loan is a loan that is specifically given to a company rather than to an individual. Business loans can be used for various purposes, such as expanding a business, buying inventory, or hiring new employees. The terms of a business loan will vary depending on the lender but typically involve a repayment schedule and interest rate. These businesses require financial assistance in the form of loans for their growth and expansion. 

A business loan helps you purchase inventory, hardware, and real estate or invest in machinery and equipment using the loan. Therefore, a loan can cover all corporate capital needs. Many financial institutions offer business loans in Bangalore. The terms and conditions of these loans vary depending on the lender. The interest rates on business loans in Bangalore are also competitive. There are a few things to consider before taking out a business loan. First, ensuring that the loan is necessary and the best option for the business is essential. Second, companies should carefully consider the terms of the loan, including the repayment schedule and interest rate. Finally, companies should be aware of the risks involved in a loan, such as a possibility of defaulting on the loan.

Why are Business Loans in Bangalore Popular?

There are a few reasons why business loans are popular in Bangalore.

First, the city is a hub for startups and small businesses: There is a lot of competition for funding, and business loans can provide a much-needed injection of cash. 

Second, the cost of living in Bangalore is relatively high: So business owners may need extra funds to cover expenses. 

Thirdly, business loans can be used to expand a business or take it to the next level: In a city like Bangalore, where there is so much competition, a business loan can give a company the boost it needs to stand out the crowd.

Also Read: How to Apply for the Best Business Loan in India? - Types of Govt. Loan Schemes

Features of Business Loans:

Business loans have several features which must be kept in mind before opting for one. Here are all the essential features you need to consider before choosing a business loan in Bangalore.

Collateral

A collateral is an asset that a borrower offers to a lender as security for a loan. The collateral gives the lender the right to seize the buy and sell it to repay the loan if the borrower defaults.

For businesses, common types of collateral include real estate, inventory, equipment, and accounts receivable. Companies typically use collateral when they take out loans from banks or other financial institutions.

The value of the collateral is essential because it must be worth at least as much as the loan. If the collateral is worth less than the loan, the lender may not be able to recover the total amount of the loan if the borrower defaults.

Collateral can be a valuable tool for businesses to get the financing they need, but it also carries some risks. If the company cannot repay the loan, it could lose the asset used as collateral.

For this reason, businesses should consider whether they can afford the loan before putting up collateral.

Interest Rate

The cost of borrowing money is called interest. When you take out a loan, you agree to pay back the principal, the original amount of money borrowed, plus interest. The amount of interest you pay depends on the annual percentage rate (APR) and the length of your loan.

The APR is the cost of borrowing money for one year, including any fees you may have to pay. Understanding the difference between the APR and the interest rate is essential. The interest rate is the cost of borrowing money without considering any fees.

The longer the length of your loan, the more interest you’ll have to pay. That’s because you’re borrowing the money for a more extended period and accruing more interest. On the other hand, a shorter loan term will have a lower interest rate because you’re paying off the loan quicker.

Interest is an essential factor to consider when taking out a loan. Be sure to compare APRs and loan terms to find the best deal.

Also Read: Top 5 Government Loan Schemes for Small Business in India

Flexibility

Many different business loans are available to businesses, each with its terms and conditions. Some loans may be more flexible, offering lower interest rates or extended repayment periods. Flexible loans can be a good option for businesses struggling to make ends meet or with unpredictable incomes.

Some lenders offer business loans with variable interest rates, which can be helpful for businesses that expect their income to fluctuate. Variable rates may be higher than fixed rates in the long run, but they can offer relief for companies that are struggling to make payments in the short term.

Other lenders offer loans with extended repayment periods, which can also be helpful for businesses that are having trouble making ends meet. More extended repayment periods can help businesses by giving them more time to repay the loan, but they can also increase the interest the company will have to pay.

Some business loans may also offer grace periods, which can give businesses a break from making payments if they are having trouble making ends meet. Grace periods can be helpful for companies, but they can also increase the interest the business will have to pay.

Businesses should carefully consider all of their options before taking out a loan. Flexible loans can be used for various purposes, including consolidating debt, financing a large purchase, or paying for unexpected expenses.

Customisation

A business loan is a loan that is given to a business rather than to an individual. The loan terms will vary depending on the lender, but they will usually require that the business owner put up some form of collateral, such as a home or a car, to get the loan. The interest rate on a business loan is usually higher than the interest rate on a personal loan because the lender is taking on more risk by lending to a business. 

Most business loans are not customised, meaning the loan terms are set by the lender and are not negotiable. However, some lenders may be willing to customise the loan to meet the borrower's needs. For example, a borrower with a bad credit history may be able to get a business loan with a higher interest rate and a shorter repayment period.

Also Read: Mudra Loan: Concept, Benefits, and Eligibility

Eligibility Criteria for Business Loans in Bangalore:

  1. You should be a citizen of India
  2. The minimum age should be 22 years, and a maximum of 65 at maturity.
  3. It would be best if you are associated with your current business for a minimum of 3 years.
  4. A CIBIL Score of 685 or higher.

Additional factors include things like your history of timely tax payments, bank balance, credit utilisation ratio, credit history, etc. Your ultimate eligibility will be assessed in light of these.

Business Loan Documentation:

These are the following documents required for the verification-

  1. Proof of identity
  2. Address Proof
  3. Bank statement for the last six months
  4. Latest ITR (2-3 years)
  5. Financials include income statements, balance sheets, profit and loss statements, etc.
  6. Proof of business establishment

*NOTE: These are just the basic document requirements, and you could be asked to submit additional documents during further procedures.

Avail Business Loan:

Many individuals in Bangalore believe that a business loan is a perfect solution to all their business demands. There are many financial institutions and banks where the business loan interest rate is competitive and inexpensive, preventing you from having to reduce essential business expenses. The business loan provides speedy disbursement and instant funding up to ₹30 lakh. You can apply for a loan online or in person through financial institutes or bank branches. There are many banks and financial institutions in Bangalore that offer loans for businesses. The most popular ones include HDFC Bank, Axis Bank, ICICI Bank, and Kotak Mahindra Bank.

Also Read: How to get an MSME loan without collateral?

Conclusion

Business loans in Bangalore can be an excellent option for small business owners needing extra capital. The interest rates are generally lower than personal loans, and the repayment terms are often more flexible. However, comparing offers from multiple lenders before choosing a loan is essential, as the terms and conditions can vary significantly.
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FAQs

Q: What is fixed time? Can I repay my business loan before the fixed time?

Ans:

The fixed time is the period in which you are required to repay the business loan. This period is different for every bank. Yes, you can repay your business loan fully before the fixed time. You must inform the bank that you will repay the business loan in full.

Q: How much time does it take to get a business loan?

Ans:

The amount of time it takes to get a business loan can vary depending on the loan you are applying for. For example, short-term loans may be approved within a few days, while long-term loans may take several weeks.

Q: Why is an application rejected for a business loan?

Ans:

There are several reasons why an application for a business loan might be rejected. The most common causes include the following:

1. Insufficient collateral: Most lenders will require some form of collateral before approving a loan. The application will likely be rejected if the borrower needs more collateral to secure the loan.

2. Poor credit history: A borrower's credit history is one of the most important factors lenders consider when assessing a loan application. The application is likely to be rejected if the borrower has a history of missed payments or defaults. 

3. Inadequate financial documentation: Lenders will require the borrower to provide financial statements and other documentation to assess the borrower's ability to repay the loan. If the borrower offers adequate documentation, the application may be accepted.

Q: What is the repayment schedule for a business loan?

Ans:

The repayment schedule is the schedule of payments that a borrower agrees to make to a lender. The repayment happens on an EMI Equated Monthly Installment). The schedule outlines the amount of each payment, the date the payment is due, and the length of time over which the borrower will make payments.

Q: What happens in case of missed payment or non-payment by a borrower?

Ans:

The lender may charge a late fee if a borrower misses a payment or makes a partial payment. If the borrower continues to miss payments, the lender may take legal action to collect the money owed. This may include hiring a collection agency, taking the borrower to court, or repossessing the borrower's property. His credit file will also be impacted, and he may be restricted from taking loans in the future.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.