How to Get a Loan for Business in India: The Complete Roadmap

Looking to fund your startup and expand your existing business? Want to know how to get a loan for business in India? 

Securing a loan in India is a structured process, and getting an approval quickly is not that easy. But with the right preparation, you can boost your approval and get the funds quickly. There are various top finance companies in India funding multiple businesses to help them grow. 

Here is the complete roadmap for your right preparation. But before moving to the roadmap, let’s check what a business loan is and why businesses require it. 

What is a Business Loan and What is the Requirement for a Business?

In a business, whether you are a startup in the IT industry or a growing digital marketing company, investing or funding are the common and known issues. So, in that case, most of the businesses are dependent on loans and finances.

It depends on the company whether they are looking for a loan to grow, survive, expand, etc. A number of govt. and private finance companies in Delhi NCR and various other cities are offering businesses loan facilities to support them. Business owners can apply for a loan based on their requirements.

If you do want to apply for a loan for your startup or growing business, then you need to know everything about the loan types available for business owners.

Types of Business Loans in India Available to Generate Funds for Business

There are many types of loans available but the most preferred and beneficial ones are are as follows:

1. Working Capital Loan: A short-term capital loan for day-to-day operations that is repaid within a year. Any business from top industries like real estate, cryptocurrency, network marketing, etc. can take a working capital loan.
2. Terms Loan: Terms Loan is typically taken for the expansion of the business, purchasing machinery, and launching new projects. While getting terms loan for business, the tenure for repayment is 1 year to 10 years. For example, new crypto exchanges in India are being launched very frequently, terms loan can help them launch their project.
3. Government Schemes: To get business loans in India, the government has implemented many schemes for needy people such as Pradhan Mantri Mudra Yojana, Stand Up India (For women and SC/ST category people). 
4. MSME Business Loan: MSME Business Loan is a type of business loan that provides loans to micro-scale, small-scale, and medium-scale businesses to start up or to establish and expand their business. For instance, businesses like bakeries, education centers, etc. can get an MSME loan.

What is the Eligibility Criteria for Getting Business Loans in India?

It is important to know which type of loan you can apply for with your eligibility. For any specific loan, it is important to know if you fall under the eligibility criteria or not. Below are the details on your eligibility for applying for a loan.

Who Can Apply for a Business Loan in India?

Criteria	Typical Requirements
Age	21–65 years (at loan maturity)
Nationality	Indian citizen
Business Vintage	Minimum 1–3 years of business operations
Business Turnover	Minimum turnover (e.g., ₹40 lakhs for some banks)
Profitability	Business should be profit-making for the last 2 years
Credit Score (CIBIL)	685–750 or above preferred
Work Status	Self-employed, proprietors, partnerships, companies, LLPs, MSMEs, startups, traders, manufacturers, retailers
Annual Income (ITR)	Minimum ₹1.5 lakhs per annum (varies by lender)
Other Requirements	Should not have defaulted on previous loans, must own a residence/office/shop/godown

 

What Are the Documents Required for Getting a Business Loan in India?

Be ready with your documents if you have checked your eligibility for getting a loan. The document verification process plays a vital role in getting approval for a loan, so you have to prepare all the required documents while applying for one:

• KYC Documents: KYC documents include the applicant’s Aadhar Card, Pan Card, Voter ID Card, or other government-approved Valid ID card
• Proof of Business Ownership: Business ownership proof includes applicant’s trade license, partnership deed agreement, and GST registration.
• Financial statements: To get a business loan in India, your financial statements such as the applicant’s audited balance sheet, profit & loss account, etc. are required.
• Photographs: Current passport-sized photographs of the applicant.
• Business Plans: A detailed business plan is necessary for startups like Future Targeted Revenue, where they should use the loan amount, outlining objectives, etc.

In the above section, we have learned about the necessary documents which are required for getting loan approval. After getting all the documents, you can simply move on to applying for a business loan. 

What is the Step-by-Step Process for Applying for a Business Loan?

Since you are applying for a business loan for the first time, you need to know the process. The steps here are going to help you understand how to apply for a business loan in India for the first time.

Step 1: Determine Requirements: Firstly, you have to decide how much money you have to require for the startup or the business expansion.

Step 2: Check Eligibility: After considering the Loan Amount, You Have to ensure that you are eligible to take a loan or not

Step 3: Gather Documents: Collect all the documents that are written above

Step 4: Choose and Compare Lender: After gathering all the required Documents, you have to choose from where you should borrow money as per your requirement, then compare bank offers, or other government schemes for a better interest rate or for best terms  

Step 5: Apply Online or Offline: In many banks, there will be an option of applying loan online, so that there is no need to roam here and there in the bank, but if your bank doesn’t have an option for applying online, you need to go to the bank and should apply loan application form there

Step 6: Submission of Loan Application Form: After filling out the application form, you have to submit your filled form with documents to the bank

Step 7: Verification and approval of the loan application form: After submission of the loan application form, the bank will verify your application form, and if all the credentials are true so your application will be approved

Step 8: Loan Disbursement: After approval of the loan application, sometimes the loan amount will be disbursed within 24 hours of Approval 

Now, you must have clarity on how you can apply for a business loan in India, whether you are eligible or not, and what types of loans are available. 

Want to know how to get fast approval? 

Bonus Point: Ideas for Getting Fast Business Loan Approvals in India

If you are following the whole process in the same manner described above in the blog, there are little to no chances that the lender should reject your loan application. 

However, there are a few key points you have to remember always before applying for loan application to avoid rejection and getting quick approval:

• Maintain a Clean and clear credit Score
• Repay the amount on time
• Prepare an Accurate business Plan, especially for Startups
• Ensure that all your documents are up-to-date and correct are not faulty documents

Final Verdict on How to Get a Loan for Business in India

Loans play a vital role in the survival, growth, and existence of businesses because without funding, no business can survive longer. Because funding is the backbone of businesses, it is important to have a strong reputation on clearing the loans. There are a few factors that you can check for and ensure are correctly followed to get quick loan approvals. To get a business loan in India requires you to follow a specific eligibility criteria to be able to apply for it. 

About The Author