Finance your business growth

A business loan is credit extended to a company, partnership, or sole proprietorship to fund operations, expansion, equipment, or working capital. It's repaid with interest over a fixed tenure.

Eligibility is based on turnover, business vintage, profitability, credit score, existing debt, and collateral. Most lenders cap unsecured loans at 25–30% of annual turnover.

A term loan is a lump sum repaid in EMIs, used for equipment or expansion. A working capital loan is a credit line for day-to-day cash flow, with interest only on the amount used.

Secured loans are backed by collateral (property, machinery, FDs), so rates are lower (10–14%) and amounts larger. Unsecured loans need no collateral, but rates are higher (14–24%) and amounts cap at ₹50 lakh.

Unsecured loans: 2–7 days. Secured loans: 2–4 weeks due to collateral verification. Fintech lenders can be faster, sometimes within 24–48 hours.

Business registration, last 2–3 years' financials and tax returns, last 6–12 months' bank statements, KYC of promoters, GST returns, and business address proof.

Most lenders require 2–3 years of operation. Some fintech lenders offer loans to businesses with 1 year of vintage, but at higher rates. Startups may need special schemes.

Secured term loans: 10–14%. Unsecured: 14–24%. Working capital: 10–16%. Rates depend on vintage, turnover, credit score, and collateral.

Yes. Interest paid on a business loan is fully deductible as a business expense, reducing your taxable profit. This significantly lowers the effective cost of borrowing.

No. Only the interest portion is deductible. However, depreciation on assets purchased with the loan may be deductible. Consult a chartered accountant.

Credit Guarantee Fund Trust for Micro and Small Enterprises — a government scheme that guarantees collateral-free loans up to ₹5 crore for MSMEs, reducing lender risk and making loans easier to get.

A government scheme offering loans up to ₹10 lakh to micro-enterprises. Categories: Shishu (up to ₹50,000), Kishor (₹50,000–5 lakh), and Tarun (₹5–10 lakh).

A government scheme offering loans of ₹10 lakh to ₹1 crore to SC/ST and women entrepreneurs for greenfield enterprises in manufacturing, services, trading, or agriculture.

Yes, but you'll pay a higher rate. Some NBFCs and fintech lenders specialise in lower-score borrowers. Having collateral or a co-applicant can help.

Yes. For sole proprietorships and small businesses, the promoter's personal credit score is a major factor. For larger companies, both the business and directors' scores matter.

Unsecured loans cap at ₹50 lakh. Secured loans can go up to ₹10 crore or more, depending on collateral and turnover. MSME schemes under CGTMSE cover up to ₹5 crore.

Yes, though some lenders charge a 2–4% prepayment penalty. Floating-rate loans usually have no penalty. Check your agreement — prepaying aggressively saves significant interest.

Moving your loan to a new lender offering a lower rate. Can significantly reduce total interest — but factor in processing fees and foreclosure charges on the old loan.

A secured loan where you pledge commercial or residential property as collateral. Interest rates are usually lower than unsecured business loans — often 10–13%.

Financing against unpaid invoices. You get up to 80–90% of the invoice value upfront, and the rest (minus fees) when the customer pays. Rates are 12–18% per annum.

A flexible credit facility where you withdraw, repay, and re-withdraw up to a limit. Interest is only on the amount used. Good for managing seasonal or fluctuating working capital needs.

If you're a sole proprietor or gave a personal guarantee, yes. For limited companies, the business's credit profile is separate, but directors' scores may still be affected.

Ask the lender why. Common reasons: insufficient vintage, low turnover, poor credit score, or high existing debt. Address the underlying issue and reapply — or try another lender.

Yes. Unsecured business loans up to ₹50 lakh are widely available. CGTMSE-backed MSME loans up to ₹5 crore are also collateral-free. Rates are higher for unsecured loans.

DSCR = net operating income ÷ total debt payments. Lenders typically want DSCR above 1.25, meaning you have 25% more income than needed to service debt. Higher is safer.

A personal guarantee from the business promoter/director that they'll repay the loan if the business defaults. Common for unsecured business loans and small companies.

Yes, but it's harder. Startups typically lack the vintage and turnover traditional lenders want. Options: government schemes (Startup India, Mudra), revenue-based financing, or equity funding.

A financing model where repayments are a percentage of monthly revenue rather than fixed EMIs. Common for startups with steady revenue but no collateral. Cost is typically higher than bank loans.

Most lenders cap unsecured loans at 25–30% of annual turnover. Secured loans can go higher. A business with ₹1 crore annual turnover might qualify for ₹25–30 lakh unsecured, or more with collateral.

Match the tenure to the asset's useful life. Equipment that lasts 5 years should be financed over 5 years. For working capital, keep the tenure short — 12–24 months. Balance EMI burden against total interest.

A shortcut to estimate doubling time: 72 ÷ rate = years. At 12%, money doubles in about 6 years. Useful for understanding compound growth or debt.

Some government schemes and MSME programmes offer interest subsidies that reduce the effective rate, but true zero-interest business loans are extremely rare. Read the fine print on any "0%" offers.

Yes, if you have consistent income documentation. Lenders typically want 2–3 years of ITRs and bank statements showing regular income. Some fintech lenders specialise in freelancer loans.

An additional loan on top of your existing business loan, usually offered after you've repaid a portion of the original. Rates are often similar to the original loan, and processing is faster.

A business loan is a fixed amount with fixed EMIs. An overdraft is a credit limit you draw against as needed, with interest only on the amount used. Overdrafts are flexible but usually more expensive per rupee.