Business Loan-SME Lending

Business Loan

A business loan is an unsecured loan for business purpose like business expansion, maintain working capital needs, purchasing plant or machinery, increasing stocks and inventory. There is no need to mortgage any properties for taking a loan. Bank or NBFC offer this loan to self-employed Nonprofessional and self-employed professionals (Doctor/advocate etc..). Bank offers this loan on basis of their financial and banking behavior. For  Get an instant business loan, a self-employed maintain his good business flow and maintain his good transaction behavior with Bank/NBFC, will be eligible for taking funds.

What are the Eligibility Criteria for business loan?

  1. Business and office stability:- Minimum Business vintage should 3 years and office stability at same place should be 1 years.
  2.  Turnover:- It should be minimum 50 lakh/year. Turnover should be in increasing trends in compression with previous years. If turnover is decline than it should not more than 10%.
  3. Reported profit-  Net profit should be profitable for last two year. It should not be reporting loss. If loss than cash profit should not be decline more than 5%.

Cash profit = Profit after tax + Depreciation + partner or director salary + interest of partner or director

  1. Applicant should have self-owned property Residence/shop/office/godown on the name of applicant or blood relative in the same city where his business is running.
  • End of use:- End of use should be clear. For which purpose he is taking loan. It should   like business expansion, maintain working capital needs, purchasing plant or machinery, increasing stocks and inventory.

What is Banking Parameters for Business Loan-SME Lending ?

  1. Bank statement should be current account or OD/CC account and it’s open date should be 1 years old.
  2. Main business account will be considered.
  3. Minimum 36 Business Credit Transection should be in Bank statement.
  4. Saving account will be considered for Professional ( CA/DOCTOR).
  5. Average bank balance should be good as minimum equal to EMI of Proposed loan amount..
  6.  No EMI bounce in last 6 months.
  7. Maximum 5% cheque return allowed in bank statement.

What is financial obligation meaning?

Any type of debt , liability taken form bank or any other sources is called financial obligation such as any type of loan , CC/OD account, credit card etc. It’s represent any type of outstanding debt.

During Loan application process, bank count monthly obligation which customer repay each month to bank. Bank also count 5% of total outstanding of credit card limit.

Monthly obligation= Total current running loan EMI+CC/OD interest per month average+ 5% of total outstanding of credit card limit.

How to calculate debtor days?

Debtor days;- After how many average days you get your money from debtor as you sells goods to your Debtor.

(AVS one day means average sells everyday)

At first your find your average sells in single day AVS per day =Total sells per annum/365 days

Than Total Debtor days = Total debtor Amount/ AVS one day.

How to calculate creditor days?

Creditor days:-  After how many average days you will pay money to your creditor as you purchase goods form creditor.

(AVP one day means average purchase in a single days).

At first, your Find your average purchase in single days AVP one day= Total purchase/ 365 days.

Total Creditor days= Total creditor Amount/ AVP one days.

NOTE:- Good debtor days and creditor days should be 90 days or maximum it should not be more than 120 days.

Mandatory Documents:-





Business Address Proof (any one of partners, directors or individual) & Residence Address Proof (all partners, directors or individual, coapplicant).
Both business & residence address proof is mandatory for all cases. Any one from the below mentioned documents:
· Latest Landline/ WLL/ Postpaid mobile bill · Latest Electricity bill.
· Valid Aadhaar Card.
· Valid Passport.
 · Valid Driving license.
· Valid shop & establishment certificate (only for business add proof).
· Gas book / bill / receipt (only for residence add proof).
· Bank statement with address for last 6 months
· Latest Leave & License Agreement.
· Latest LIC premium receipt/ policy (only for residence add proof).
 · Latest Property tax / maintenance bill.
· Property papers as Sale deed/ Share certificate or any other doc -related to property.

Ownership Proof (any one of partners, directors or individual, co- applicant).
Any one from the below mentioned documents:
· Latest Electricity bill.
· Latest Property tax / maintenance bill.
· Property papers as Sale deed/ Share certificate or any other doc related to property.
Signature Proof (SCUF agreement signing partner, director or individual, co-applicant).Any one from the below mentioned documents:
· Valid Passport.
· PAN card.
· Signature verified by bank from where repayment. cheque is issued(applicable for applicant/s).
· Signature verified by bank (applicable for co-applicant/s)
Identity Proof (all partners, directors or individual, coapplicant).Any one from the below mentioned documents:
·  Valid Passport.
 ·  Valid Aadhaar card.
· PAN card.
·  Valid Driving license.
 · Valid Voter ID (only for co-applicant).
 · Valid Photo credit card.
 · Bank pass book with photo stamped (previous 6 months).
 · Photo attested by bank.
 ·  Property registered deed.
Date of Birth Proof (SCUF agreement signing partner, director or individual, coapplicant).Any one from the below mentioned documents:
· Birth certificate.
· School leaving certificate.
· Valid Passport.
·  Valid Aadhaar card.
.· Valid Driving license.
Latest LIC premium receipt/ policy.
· PAN card · Any other valid Govt ID card.
Stability Proof (any one of partners, directors or individual, co- applicant).Any one from the below mentioned documents:
· Postpaid mobile bill.
· Landline/ WLL phone bill.
· Electricity bill.
· Valid Passport.
· Valid Driving license.
Bank statement with address.
· Property tax / maintenance bill.
Property papers as Sale deed/ Share certificate or any other doc related to property.
· Gas book / bill / receipt.
LIC premium receipt/ policy.
· Valid Voter ID.
· Sales tax certificate.
· Service tax certificate.
Shop & establishment certificate.
· Excise duty certificate.
· TDS certificates.
Partnership deed (Registered / notarized) / MOA.
· Document issued by a government agency · IT Returns.
Business continuity & YIB proof specifying nature of business & date, year mentioned to be in accordance with YIB norms requirement.Any one from the below mentioned documents:
 · Sales tax certificate.
· Service tax certificate.
 · Shop & establishment certificate.
· Excise duty certificate.
 · TDS certificates.
· Partnership deed (Registered / notarized) / MOA.
 · Company PAN Card.
· Document issued by a government agency.
· IT Returns – should mention current business type (ITR filling date to be considered as YIB date and not assessment/ financial year).
 · Current Account opening date under same business name.
Income Proof Documents. Audited Annual report, Tax audit report with annexures for last 3 years for TO >= INR 100 Lakhs.
· Statement of Income for tax computation, P&L Account & Balance sheet for last 3 years · · Bank statement for latest 12 months.
Latest 12 month Gst return required.

FAQ(BUSINESS LOAN)

If you want to start a business and for this you need a business loan, then you can contact the bank manager in any government bank. Funds for many start-up businesses from the government in the bank comes from the government, which you can take advantage of. If your business is old and it has been two years while doing business. Any government bank, private bank and finance company can give you loan. You can contact them by visiting their branch.
Business loan can be given to you by private banks and private finance companies. In private banks, HDFC Bank, ICICI Bank, Kotak Bank, Axis Bank and in finance company Bajaj Finance, Tata Capital, Aditya Birla Capital etc. are giving you loans, from where you can take a loan.
Business loan is an unsecured loan, so its interest is higher as compared to other loans. It starts at 15% reducing rate and goes up to 28% reducing.
The minimum business loan amount ranges from Rs 50000/- to Rs 50,00,000/-. It depends on the financial condition of the company that how much the bank will give him the loan.

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