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Business Loan

Ensure your business's growth and sustainability with the right type of business loan tailored to meet your needs.

What Is a Business Loan?

A business loan provides capital to business owners for operational expenses like salaries, rent, or expansion. It is unsecured, meaning no collateral is required. The lender assesses the creditworthiness of the business owner before approval, ensuring the funds are only used for business purposes.

Types of Business Loans

Different businesses have diverse financial needs. Here are some of the most common business loans available:

  • Term Business Loans: Short-term loans with a tenure of 1-5 years, typically based on business credit history.
  • Working Capital Loans: Short-term loans for daily operational expenses such as rent and salaries, with a 1-5 year tenure.
  • Commercial Business Loans: For high-turnover businesses, offering immediate capital up to Rs 50 lakh with a 3-5 year tenure.
  • Startup Loans: Designed for startups, providing flexible repayment options without collateral, to help entrepreneurs expand their businesses.
  • Equipment Financing: Financing for machinery or technology purchases, also usable for other business expenses.

Types of Business Loans in India

Find the right loan to support your business growth and operational needs.

A Term Loan is one of the most common bank loans for starting a business in India and is extended by banks and financial institutions. With this loan, you can borrow a specific amount of money for a predetermined period at a fixed interest rate.

Generally speaking, three types of Term Loans are available - short, intermediate and long. The tenure for these loans can range from 12 months to 60 months or more, depending on the lender. You can raise Term Loans for various business purposes, such as purchasing assets, expanding business operations or launching new projects. In most cases, Term Loans require you to furnish collateral as security to the lender. The good thing is that interest rates on Term Loans are quite affordable, since it is a secured loan.

Cash Credit is one of the most popular working capital loans. It is a short-term loan provided to businesses to meet their working capital requirements. You can withdraw funds up to a predetermined credit limit assigned by the lender. This limit is calculated on the working capital available in your business and future financial projections.


One key benefit of Cash Credit is that the interest rate applies only on the amount withdrawn. This provides flexibility and easy access to capital for day-to-day operations.

Like Cash Credit, Overdraft is a form of short-term borrowing that allows businesses to withdraw funds exceeding the balance in their bank account. Banks and financial institutions extend overdraft facilities against collateral or a predetermined credit limit. Interest is charged on the amount utilised from the limit, and there is no limit on how to use the funds. This makes it an efficient way to manage cash flow fluctuations.

A Letter of Credit (LC) is a financial instrument used in international trade. The bank provides a payment guarantee to suppliers or exporters, reducing risk for both parties and ensuring secure trade operations.

A secured loan where you pledge property as collateral. Ideal for large business expansions, asset purchases, or debt consolidation. Due to collateral, these loans have lower interest rates and longer repayment terms.

A secured loan provided against gold. Small business owners prefer these loans for quick processing, minimal documentation, and short-term funding. Often involves bullet repayment options for flexibility.

A method of financing where businesses sell invoices to a third party (factor) at a discount. Improves cash flow and working capital by reducing the credit period, with banks often acting as the factor.

Unsecured Business Loans require no collateral. Suitable for businesses needing quick funding, these loans depend on creditworthiness but often come with higher interest rates.

Designed for new businesses, Startup Loans provide funding for initial investments, equipment, marketing, and other launch costs. They offer flexible terms to support the growth needs of new ventures.

Long-term financing for large projects, including infrastructure, real estate, and manufacturing. Tailored for specific project needs with extended repayment terms and secured against project assets.
Eligibility Criteria for Business Loans
  • Established enterprises operating for at least six months
  • Minimum turnover of Rs 90,000 in the last three months
  • Business not categorized as blacklisted/excluded
  • Office location not on the negative location list
  • Charitable organizations, NGOs, and trusts are ineligible
Documents Required for NBFC Business Loan
  • KYC documents – Identity and address proof of borrower and co-borrowers
  • PAN Card of borrower and co-borrowers
  • Bank statements for the last 6-12 months
  • Signed copy of standard terms (for term loan facility)
  • Additional documents for credit assessment
  • GST Registration
  • Proof of business registration
  • Company deed and PAN Card for partnerships

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