Thinking of scaling your business but falling short on funds? You’re not alone. Thousands of entrepreneurs face the same challenge every day. The good news? A business loan from banks or NBFCs (Non-Banking Financial Companies) could be the perfect solution to bridge your financial gap and help your business grow.
In this blog, let’s break down how business loans work in India and what you should know before applying.
✅ What is a Business Loan?
A business loan is a type of financing that helps entrepreneurs and business owners meet various business needs—like expanding operations, managing cash flow, buying equipment, or even launching new products.
These loans are offered by:
- Banks (both private and public sector)
- NBFCs (like Bajaj Finserv, Lendingkart, etc.)
🔍 How Do Banks and NBFCs Evaluate Your Application?
Before approving your loan, lenders assess a few crucial aspects:
- Your Credit Health (CIBIL Score):
A good credit score (usually 720+) indicates financial discipline and makes it easier to get approval. - Business Health & Performance:
Lenders will look at your annual turnover, profit margins, growth potential, and overall financial stability. - Business Valuation:
Your company’s worth, assets, liabilities, and market position are all taken into account. - Repayment Capacity:
Your ability to pay EMIs regularly without strain is crucial. They also look at your existing liabilities and debt-to-income ratio.
💸 How is the Loan Repaid?
Most business loans are repaid in EMIs (Equated Monthly Installments). The EMI includes both principal and interest, making it a convenient way to manage repayment.
💰 Interest Rates:
- Banks and NBFCs usually charge between 10% to 36% annually.
- These are calculated on a reducing balance basis, which means the interest is charged only on the outstanding loan amount.
📄 Documents Required:
While exact documentation varies by lender, typically you’ll need:
- PAN card & Aadhaar
- Business registration proof (GST, MSME, etc.)
- Bank statements (last 12 months)
- ITRs (last 2-3 years)
- Financial statements (P&L, balance sheet)
- Business plan (for larger loan amounts)
⚠️ Pro Tips Before You Apply:
- Maintain a healthy credit score (above 720)
- Clear existing debts to improve eligibility
- Keep all your financial documents updated
- Don’t apply to multiple lenders at once—it hurts your credit report
- Consult a financial advisor (like Shivafinz) for tailored guidance
🎯 Final Thoughts
Getting a business loan in India is easier today than ever before—but only if you know how to position yourself well. Whether you’re a startup, an MSME, or a growing company, the right loan can give your business the push it needs.
For personalized support, expert tips, and real-time guidance on business loans, follow Shivafinz on Instagram, LinkedIn, and YouTube.
🔗 Want to speak to a business loan advisor? Contact Shivafinz today.