11 Ways Traders And Businessmen Can Benefit From Business Loan

What Is A Business Loan? Capital is the backbone of any business, and every businessman or trader needs it to operate effectively. Whether it’s managing short-term cash flow or planning a long-term investment, a business loan provides the necessary funds to meet your day-to-day capital needs and achieve your goals. The funding requirements for a […]
15 jun, 2024   •   6 min read
11 Ways Traders And Businessmen Can Benefit From Business Loan

What Is A Business Loan?

Capital is the backbone of any business, and every businessman or trader needs it to operate effectively. Whether it’s managing short-term cash flow or planning a long-term investment, a business loan provides the necessary funds to meet your day-to-day capital needs and achieve your goals. The funding requirements for a business also depend on its nature whether it is a capital-intensive business or at a stage of development, be it growth, or maturity. Typically, businesses require the highest capital during their early stages and for expansion purposes.  A Business Loan for traders and businessmen is a financial product introduced to help businessmen and traders get the capital needed to run day-to-day operations effectively. Instead of equity financing, where you lose your shares of the business, a Business Loan is a financing option that allows you to repay debt over time while keeping full ownership of your business. It helps businesses maintain the cash flow and growth without giving up control of your company.

Types of Business Loan

Business loans are available through various financial institutions such as banks, government schemes, or NBFCs (Non-Banking Financial Companies), and are offered in many forms. Each form caters to different business needs such as project needs, operation costs or growth. Here are a few types of business loans that are available in India: 1.Term Loans: A loan given for a set amount and repaid over a fixed time, often used for business growth. 2.Cash Credit: A credit facility that lets businesses withdraw more money than they have in their account, up to a limit. 3.Overdraft: A facility allowing account holders to spend more money than is in their account, within an agreed limit. 4.Letter of Credit: A guarantee from a bank that assures payment to a seller once certain conditions are met in a trade deal. 5.Business Loan Against Property: A secured loan where businesses use property as security to borrow money. 6.Factoring or Invoice Discounting: A way for businesses to get cash quickly by selling unpaid invoices to a lender at a reduced value. 7.Unsecured Business Loan: A loan that does not require collateral and is given based on the borrower’s creditworthiness. 8.Startup Loan: A loan for new businesses to help cover early-stage costs and get started. 9.Project Finance: A loan used to fund large projects, which is repaid using the money the project earns later. 10.Working Capital Loan: A short-term loan to cover everyday business expenses like salaries or inventory. 11.Government Loans/Schemes: Affordable Business Loans or financial support offered by the government to help businesses, often at low interest rates. 12.Point-of-Sale (POS) Loans: A POS Loan or Merchant Cash Advance given to businesses based on their future card sales at the point of sale. 13.Equipment Finance: A loan to help businesses buy or lease machinery and equipment needed for their work.

11 Benefits of Business Loan for Traders & Businessmen

Business loans offer traders and businessmen the financial support needed to sustain and grow their businesses. Their multiple benefits of Business Loans which make them a reliable and efficient funding solution. 1. Flexible Usage: Financial institutions generally do not dictate how Business Loans are used, allowing traders the flexibility to use funds for inventory, equipment, operations, or expansion as needed. 2. Convenient & Easy: With simplified application processes and online platforms, obtaining a business loan has become quick and hassle-free for traders and entrepreneurs. 3. Reasonable Interest Rates: Business loans often come with competitive interest rates, making them an affordable financing option for businesses of all sizes. 4. Profit Retention: Unlike onboarding investors, which requires sharing profits, business loans allow traders and businessmen to retain full ownership and enjoy all the profits while repaying the borrowed amount over time. 5. No Collateral Required: Unsecured business loans allow traders to access funds without pledging any personal or business assets as security. 6. Working Capital Support: A business loan provides the cash flow needed to cover daily operations, ensuring smooth business functioning during challenging periods. 7. Diverse Loan Options: From term loans to working capital loans, there are multiple types of business loans tailored to meet specific business needs. 8. Tax Benefits: Interest paid on business loans is often tax-deductible, reducing the financial burden for traders and entrepreneurs. 9. Quick Disbursal: Business loans are processed and disbursed quickly, ensuring that businesses can access funds when they need them most. 10. Improved Business Credit: Timely repayment of business loans helps build a strong credit score, making it easier to secure funding in the future. 11. Flexible Loan Amount: Businesses can choose loan amounts based on their specific needs, whether for small operational expenses or significant investments.

Business Loan Eligibility

Every financial institution has its own rules for providing business loan for traders and businessmen. We’ve listed the most common requirements that work for most lenders. For personalised advice, it’s best to speak to an expert. 1. Age Criteria: Applicants must be at least 21 years old at the time of application and not exceed 65 years at loan maturity. 2. Eligible Entities: Individuals, startups, MSMEs, sole proprietorships, partnership firms, private and public limited companies, LLPs, retailers, traders, manufacturers, and non-farm income-generating businesses in the services, trading, or manufacturing sectors. 3. Business Vintage: The business must be operational for at least one year. 4. Business Experience: A minimum of one year of experience in the current business, with no changes to the business location. 5. Annual Turnover: Defined by the financial institution based on their lending policies. 6. Credit Score: A credit score of 750 or above is preferred by most banks and NBFCs. 7. Nationality: Applicants must be Indian citizens and should not have defaulted on any previous loans. 8. Additional Requirements: The applicant must own a residence, office, shop, or warehouse.

Business Loan Documentation

Each lender may ask for different documents when applying for a business loan. However, here is a list of commonly required documents. For specific requirements, it’s best to consult your lender or an expert. 1.KYC Documents:
  • ID Proof: Aadhaar Card, PAN Card, Passport, Driving Licence, Voter ID.
  • Address Proof: Recent utility bills (electricity, water), rent agreement, or sale deed.
2.Business Proof:
  • Business registration certificate.
  • Proof of business continuity (e.g., GST returns, trade licences).
  • Partnership deed or MOA and AOA (if applicable).
3.Financial Documents
  • Bank statements from the past 6 months.
  • Latest ITR with income computation, balance sheet, and profit & loss statement certified by a CA (for existing businesses).
4.Application Form and Photographs
  • Duly filled loan application form.
  • Passport-sized photographs of applicants, partners, or directors.
5.Additional Documents
  • Business address proof.
  • Ownership proof of residence or office.
Any other document required by the lender based on the business type.

Want to know how a business loan can benefit in your region?

If you're curious about how a business loan can benefit your region, we're here to help!  At BankEMI, we’ve had the pleasure of helping businesses understand the benefits of a business loan in Chandigarh, Panchkula, Mohali, and other parts of India. We’re here to guide you through every step of securing the right loan, ensuring the process is as smooth and easy as possible. Here’s what some of our clients have to say about the business loans in chandigarh and in various regions of India: Ravi Kumar, Owner of a retail store in Chandigarh: "BankEMI helped us secure the business loan in Chandigarh when we needed to expand our business. The process was quick, and the support was incredible!"  Neha Sharma, Founder of a startup in Panchkula: "Thanks to BankEMI, we got the right loan with great terms, allowing us to grow our operations without the hassle." 

Conclusion

Affordable Business loans give traders and entrepreneurs the support they need to grow and manage their businesses. With simple processes and many options, they help achieve goals while maintaining complete control and full ownership of the business.  Want to learn more? Contact us today and let us help you secure the perfect business loan to take your business to the next level.    

FAQs

1.What is an advantage of a loan in business? Business loans provide funds without sharing profits, allowing businesses to grow while retaining full ownership.   2.What are the uses of a business loan? Business loans can be used for inventory purchase, equipment upgrades, expansion, working capital, or handling operational expenses.   3.How do loans help entrepreneurs? Loans give entrepreneurs financial support to start, grow, or sustain businesses without immediate financial strain or losing control.   4.What is a short note on a business loan? A business loan provides funds for business needs, repaid over time, ensuring operational continuity and growth opportunities.   5.How to get a business loan in chandigarh? At BankEMI, we simplify the process of securing a business loan in Chandigarh. We’ll help you find the best loan options and guide you through every step. Contact us today to get the funding you need for your business!

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