written by | March 23, 2022

How to Apply for an e-Commerce Business Loan in India?

Online marketplaces have expanded at an unbelievable speed in recent years, and it is unlikely to slow down in the future. After all, online shopping is such an affordable luxury.

Customers are exposed to thousands and millions of attractive deals. There are occasional discounts, the festival season offers and so on. This high demand has attracted a lot of entrepreneurs to start becoming e-commerce sellers. Once you pierce the market well as an e-commerce company, you'll get earning opportunities all around you.

Considering the capital-related requirements in starting an e-commerce seller, many banks have developed a solid infrastructure for passing loans quickly. You can avail of the benefits from such special e-commerce loans.

Many banks offer great services, using which you can ensure your company's rapid growth, but it's your job to do research before availing of such e-commerce loans.

Did you know?

The Indian government has aimed to develop an e-commerce industry worth ₹9900 crores by 2024 while focussing mainly on growing the grocery and fashion sectors. The government has launched many attractive programs to transform this dream into a reality, such as The Startup India Programme, Digital India Scheme, Skill India, National Innovation Foundation and BharatNet

What Are e-Commerce Loans All About?

 There will be an increase in e-commerce companies in India, and this will require additional funding sources to help get them on their feet. Today, e-commerce loans are available at low-interest rates. You can use various apps to get loans, buy insurance and make online payments. 

 It's easy to use, and some financial institutions offer loans at attractive interest rates. You can conveniently use these funds for various business operations such as acquisitions of other companies, expansion, purchasing high-value equipment and so on. 

However, if you’re planning to set an employee base, you must do proper calculations. It won't be a daunting task; you can use Salary Calculator, and it’ll take care of the calculations such as leave travel allowance, special allowance, bonus, etc.   

How Can I Apply for an e-Commerce Business Loan?

 Starting an online business in India has never been easier. But if we talk about getting an e-commerce loan, there are some facts worth understanding.  

You can run numerous businesses online, and a few out of those can be very lucrative. Some Indian online sellers have recently grown at an unbelievable rate, and you can join them too in the future. There's no doubt starting an e-commerce business is a fantastic idea.

In the past, the banking systems were exceptionally slow and could not have matched the current needs of e-commerce businesses. However, the times have changed now. 

But what are the key advantages of getting e-commerce loans? Let's find out!

  • The offline documentation procedure for processing and passing e-commerce loans was tiring for online sellers.
  • High competition in the e-commerce market has made acquiring funds faster and more efficient. 
  • Business owners in the e-commerce sector can easily finance and avail banking solutions to save effort and time in formalities.
  • Online sellers in India can reap extra advantages and enjoy low-interest rates on loans.
  • Modern banks run e-Commerce loan procedures (application processing and disbursal) faster than traditional loan application procedures.  

Features of e-Commerce Loans

 Many banks offer specially customised loans for online sellers in India. Here are some attractive key features of such loans:

  • Interest payment 1.5% onwards
  • Highly extended loan value between ₹1 lac to ₹1 crore
  • Monthly and bi-monthly repayment schedule choices
  • Type of unsecured loan, no need for collateral 
  • Loan tenure ranged between 90–270 days .

Benefits of e-Commerce Loans

These business loans have many advantages. They require less documentation and can be extended quickly. The loans are easy to obtain, and one can access them quickly, and documentation is crucial, especially for people in business. 

Without it, stability of income can be a problem. Flexible repayment is possible with a fortnightly payment option. These loans are often used to fund working capital and inventory management, and these loans are available to both existing businesses and startups. This convenient rolling credit arrangement allows for loans to be extended for a shorter time.

Eligibility Criteria to Availing e-Commerce Loans

In the past, obtaining e-commerce loans from NBFCs and banks was challenging due to tough eligibility criteria. Now, these criteria have been relaxed. You can avail of a loan even if you haven't filed your first Income Tax Return yet. Also, the trend of venture capitalists funding startups is getting increasingly common. Here are the eligibility criteria for availing of e-commerce loans:

  • Your business should have a specific per month revenue, and this varies as per lender to lender. 
  • Your business must have a strong presence in at least one big e-commerce platform such as Alibaba, Paytm, Amazon, Flipkart, etc. 
  • You can also get benefits from negotiating favourable terms if you've got an attractive credit score. 
  • You should own a registered business, which should have been running for a minimum of 6 months. 

Also Read: Is E-commerce Business better than Retail Business?

Documents Required

Here are the documents the banks look for before loan processing:

  • Identity proof - Aadhaar Card, PAN card
  • Current account bank statement of your previous six months
  • Residential address proof - Driving licence, voter ID, rent agreement, passport, ration card
  • Shops and establishment certificate
  • GST registration certificate

How Do You Choose the Best e-Commerce Loan for You?

The right e-commerce loan is essential for an online seller's success in most cases. Many e-sellers fail to scale up their businesses because they lack the funds or vision, and these are key considerations when choosing an e-commerce loan. 

These are:

All Costs Associated With Selling on the Internet Platforms Should Be Calculated

Proper market research is necessary to determine the pricing of comparable products by other sellers before selling a product online. When pricing products, one should consider all costs associated with moving to an online platform. 

These include both registration costs and recurring monthly fees. A few additional charges may apply, such as transaction fees, server storage, bandwidth, plug-ins, apps, etc. All of these costs should be considered and a loan assessment is done to determine the amount to be borrowed.

Also Read: What is the Difference Between Commerce and Business?

e-commerce loans have the same interest rate as other loans. It is a key aspect that must be taken into consideration. It is important to compare the terms of different lenders. These loans are typically short-term.

Loans Are Easily and Quickly Disbursed

These loans have minimal processing requirements, require minimal documentation and can be processed at a fraction of the cost of other loans. The loan value is typically “x” times the monthly income of your business.  

It’s vital to have a stable income to borrow funds. It’s especially true in the case of an unsecured loan without collateral. You can use inventory as collateral for e-commerce loans in some cases.

Underlying Promise for e-Commerce Loans

The borrower must repay the loan if the loan is extended by an NBFC, bank, or other financial institution as an unsecured loan. Equity dilution may occur in other cases where the funding is from venture capitalists. The borrower must give up a portion of the ownership. 


For entrepreneurs planning to start their small-scale e-commerce businesses, an e-commerce business loan can be a hassle-free and fast way of getting the necessary funding. You don't have to arrange any collateral to avail such a loan because it's an unsecured one. Just ensure to pass the eligibility requirements and maintain an attractive credit score before attempting to avail of e-commerce loans

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Q: How to start an online business in India?


Follow these steps:

  • Design an e-commerce business model.
  • Choose a product/service to sell online.
  • Do in-depth market research.
  • Understand the dynamics and intricacies of the online business model.
  • Establish your e-commerce business legally.
  • Set up your e-commerce website.
  • Draft marketing strategy,
  • Finally, test and launch your website

Q: Can I expect some additional benefits or subsidies while availing of an e-commerce business loan?


Depending on your credit score and financial conditions, a few banks may agree to enrich you with some extra benefits. The Indian government also offers many subsidies to support small e-commerce startups as much as possible.

Q: Can I get an e-commerce business loan from Public Sector Banks in India?


Yes, if you face difficulties in meeting the requirements of getting a loan from any major bank, you can opt for public sector banks for your funding. Here, you may have to pay higher interest rates in most cases, and the consistencies may not be as flexible as large nationalised banks offer.

Q: What are the best e-commerce business ideas in India?


Some of the best and most lucrative ideas include:

  1. Accessories and smart home products
  2. Augmented/virtual reality headsets or apps
  3. Jewellery products/niche fashion
  4. Online fitness training packages
  5. Personal safety equipment.
  6. Digital marketing.
  7. Dining mats & kitchen coasters.

Q: What’s the loan approval process period of Mudra Finance’s e-commerce loans?


You can generally expect this period to be around 7-10 working days.

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