What is a Business Loan?
A business loan is a type of financing provided by banks, NBFCs, or financial institutions to entrepreneurs, business owners, or companies for business-related expenses like expansion, working capital, inventory purchase, or new projects. These loans can be secured (backed by collateral) or unsecured (no collateral, but higher interest).
Advantages of a Business Loan
Quick Access to Capital
Helps meet urgent business needs like working capital, expansion, or equipment purchase.
No Profit Sharing
Unlike investors, lenders do not claim business profits; you retain full ownership.
Flexible Loan Amount and Tenure
Amounts can range from a few lakhs to several crores with tenures of 1–10 years.
Improves Cash Flow Management
Supports day-to-day operations without disturbing other resources.
Tax Benefits
Interest paid on business loans is considered a business expense, reducing taxable income.
Multiple Loan Options
Term loans, working capital loans, overdrafts, invoice financing, etc.
Eligibility Criteria
Eligibility may differ by lender, but commonly:
Criteria Requirement
Age 21–65 years (at loan maturity)
Business Type Proprietorship, Partnership, LLP, Pvt Ltd, Public Ltd
Business Vintage Minimum 1–3 years in operation
Annual Turnover As per lender norms (e.g., ?10 lakh – ?1 crore minimum)
Credit Score 700+ preferred
Profitability Business should be running profitably for last 1–2 years
Documents Required
For All Applicants
Identity Proof: Aadhaar, PAN, Passport, Voter ID
Address Proof: Utility bill, Aadhaar, Passport
Business Proof:
Business registration certificate
GST registration
Partnership deed / MOA & AOA (for companies)
Financial Documents:
IT returns for last 2–3 years
Balance sheet & Profit & Loss statements (audited)
Bank statements for last 6–12 months
Ownership Proof of Business Premises (if applicable)
Photographs: Passport-size