Business Loans: Eligibility, Interest Rates & Application Process

What Is a Business Loan?

A business loan is money you borrow to start or grow your business. Business Loans can be availed from banks, NBFCs (companies that lend money but aren’t banks), or other places. Use it to buy stuff like equipment for your boutique, pay bills, or get a bigger shop. Knowing the small business loan requirements will help you pick the right one.

Types of Business Loans

There are different loans for different needs. Here’s the list:

• Term Loans: Borrow a set amount and pay it back over years.
• Working Capital Loans: Help with daily costs like rent or supplies.
• Startup Loans: For new businesses to cover starting costs.
• Equipment Loans: To buy tools, like a sewing machine.
• Invoice Financing: Get cash from unpaid customer bills.
• Business Lines of Credit: Use money up to a limit and pay interest only on what you use.

Each loan has its own business loan eligibility criteria, so check those before applying.

Business Loan Interest Rates

Business loan interest rates in India depend on the lender and your credit score. They usually range from 10% to 36% per year. Comparing business loan interest rates helps you find the cheapest deal. High business loan interest rates can make your loan expensive, so shop around to save money.

How to Apply for a Business Loan

Knowing how to apply for a business loan is super important. Here’s the steps:

1. Figure Out Your Needs: Decide how much money you need and why (e.g., ₹5 lakh for inventory).
2. Explore Lenders: Look at banks, NBFCs to know your options.
3. Check Business Loan Eligibility Criteria: Make sure you meet requirements like credit score or business age.
4. Gather Documents: Collect ID proof, business papers, bank statements, and tax returns.
5. Apply: Fill out the application online or at a bank branch.
6. Wait for Approval: The lender reviews your application, and if approved, the money lands in your account.

Learning how to apply for a business loan takes time, but it’s worth it.

Government Schemes for Women Entrepreneurs

India has special programs for women entrepreneurs. These offer lower business loan interest rates, less need for collateral, and easier applications. Here are some:

• Stand-Up India Scheme: Helps women start businesses.
• Udyogini Scheme: Great for small businesses in villages.
• Annapurna Scheme: Perfect for food businesses like catering.
• Stree Shakti Package: Supports women running companies.

Check the business loan eligibility criteria for these schemes in our article on government schemes for women entrepreneurs in India.

Common Mistakes Women Entrepreneurs Should Avoid

Mistakes can mess up your loan. Watch out for these:

• Applying without checking the business loan eligibility criteria.
• Skipping comparisons of business loan interest rates from different lenders.
• Ignoring loan terms (watch for hidden fees!).
• Borrowing more than you need.

Conclusion

Starting a business is so exciting, and a loan can make it real. Learn how to apply for a business loan, check business loan eligibility criteria, and explore women’s programs to make smart choices. At Lxme , we believe money shouldn’t stop women from chasing dreams. We’ve got tools, tips, and a community to support you, whether you’re starting a business or growing big.

Want to know how much your EMI would be? Use our free Loan Calculator to understand the details and plan better!
Join our Lxme community, meet women entrepreneurs, and go to expert-led sessions to learn more! Download the Lxme app – mutual fund investment platform and start today.

FAQs:

Further read:

• 5 Mistakes to Avoid When Using the Debt Snowball Method

• What Is Slow Living and Why More Women Are Choosing It?

• 5 Mistakes to Avoid When Using the Debt Snowball Method