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Business loan advisory

Need to expand your business but short on funds?

  •  Get our experts to help you get your documents ready so that you can be eligible for a business loan on the basis of your business performance only.

Business loan advisory


A company's growth is essential. In this competitive environment, a company cannot exist without increasing revenue and profit. There are numerous strategies to boost revenue, ranging from new solutions to performance marketing. However, all of this requires a significant amount of money.

A business loan from the lending organizations is the ideal option to fund such ambitions. In India, there are several types of business loans, each of which is tailored to a certain situation.


A business loan is one that is meant solely for commercial needs. It entails the formation of a debt, which will be repaid with interest, as with all loans. Bank loans, mezzanine finance, asset-based financing, invoice financing, microloans, business cash advances, and cash flow loans are among the several forms of business loans available.

In India, there are various sorts of business loans, each of which is applicable to different types of businesses, has its own set of business loan qualifying criteria, and serves a specific function. To make things easier for you, we've put together a list of the most common forms of business loans and their perks.

Loan types

1.Term Loans
A term loan is a frequent method of obtaining business funding. A secured or unsecured loan is possible. The amount available is determined by the company's credit history, with terms ranging from one to five years for unsecured business loans and up to 15 to 20 years for secured business loans. A term loan is typically used for capital purchases. The lender disburses the authorized amounts in one lump sum.

2. Start-up Loan
A start-up loan is for new firms that are just getting started. Applicants for such loans may not have a solid credit history due to a lack of company experience. As a result, while evaluating the loan application, the lender considers both the borrower's personal credit history and the company's credit history. When determining the loan amount, length, and interest rate, turnover data and other criteria are taken into account. The business must be set up and running, and the applicant must show proof of its existence and license.

3. Working Capital Loan
Working capital loans are small business loans that are used to supplement a company's cash flow. It establishes the crucial cash flow balance required to run a business. This loan can be used to cover cash shortages during off-seasons or to meet customer demands during peak seasons. Working capital loans are frequently used by service providers, producers, distributors, merchants, and traders who deal in exports and imports.

4. MSME & SME loan
A type of loan specially designed to fund operations of any micro, small, or medium-sized enterprises.

5. Machinery loan
A type of loan, which helps enterprises obtain funds for buying new equipment or machinery and enhance productivity.

Eligibility criteria for business loan

Following are the eligibility criteria for business loan:

  •  A well-established company that has been in existence for at least six months.
  •  The company should not be blacklisted or prohibited from SBA financing.
  •  The physical location of your enterprises should not be in the negative location list.
  •  Trusts, NGOs and charitable institutions are not eligible for small business loans.

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Documents required for business loan

When asking for a company loan, you must provide a specific set of documentation to back up your request. The following are some of the most important common documents:

Application Form
Fill the loan application form with the necessary details and provide one passport-sized photograph

Proof of Applicant's Identity
Passport, PAN card, Voter's ID card, driving license, and MAPIN (Market Participant Identification Number) card


Address Proof
Aadhaar Card, Voter’s ID, Ration card, telephone bill, lease agreement, or electricity bill

Proof of Age
Passport, PAN card, Voter's ID

Financial Documents
IT returns for the last two years, bank account statements of last six months, and P&L and balance sheet for last two years audited by a chartered accountant (CA)

Steps to get a business loan

Here are things to keep in mind before applying for a bank business loan.

1. Have a proper business plan
Many banks require a comprehensive financial plan that outlines what your firm comprises in order to receive a loan. It serves as an introduction to who you are and what your company does. A business plan should be able to define the company's goals, mission, and operating procedures in order to meet all of the specified objectives. Remember that a strong business plan indicates that the company is likely to thrive in the eyes of the lender.

2. State how you want to spend your finances
Banks have a tendency to assess how the loan applicant wants to spend the funds borrowed. If you want to purchase equipment for example, you need to apply for an equipment loan. On the other hand, if you want funds to keep the business running before your debtors pay you, it would be advisable to apply for a short-term loan. Thus, stating what your loan will be used for makes it easy for the bank to determine whether the amount applied for will meet all your needs.

3. Be keen on your credit score
Nowadays, all banks have to verify whether every applicant is eligible to be given a loan. When applying for financial help, it is advisable to check your personal credit reports and scores. A credit score of 700 and above is excellent. If your score is below 680, it would be hard for you to get a loan but you may want to consider a revenue based loan as an alternative. If your score is low, work hard and raise it before applying for any bank loan.

4. Clean up your credit report
Sometimes there could be errors in your credit report and if you are not careful, it might negatively affect your credit score. This is why it is always advisable to monitor your business credit and personal credit files regularly. In case you notice some errors, contact a credit reporting agency immediately to rectify and raise the score by removing the discrepancies, otherwise no loan will be approved by a bank when your credit rating is low.

5. Assess all your lending options
After checking your credit report and ensuring that it is okay, it is time to research and come up with a list of banks that are viable to extend the type of loan you are in need of. Choose the bank that offers loans at low interest rates and offers the most flexible approval guidelines.

6. Keep proper financial records
Getting a business loan from a bank becomes easier when you have proper financial statements. Banks will always want to check your balance sheet, cash flow statements and income statements so as to ascertain whether you have the ability to repay the loan or not. This means that if you have not been keeping these records, it is time to start since they could be of help in future when applying for a loan.

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