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How Do Business Loans Work?
Posted on Monday, July 17th, 2023 | By IndusInd Bank
SUMMARY: Financial aid in the form of a business loan can provide necessary capital to start or expand a business, purchase equipment, hire employees, and invest in marketing. IndusInd Bank’s Business Loans offer opportunities for innovation, allowing businesses to stay competitive and seize growth prospects.
Business runs on capital. Not only do you need money to start a business, but also need extra funding during its key phases to grow adequately. But even before you apply for a business loan, it is important to understand why it is important, how it works, and other factors associated with it.
Why Businesses Should Use Business Loans
Getting a business loan helps a business seamlessly manage its expenses and focus on what it’s good at!
Business Loans are commonly used to inject funds in the following areas-
- Startup expenses
- Operating expenses
- Real estate purchases or remodelling for existing premises
- Overall debt consolidation/refinancing
- Buying equipment or inventory
- Acquisition, expansion or franchising needs
- Marketing and advertising
The Process of Acquiring a Business Loan
Most loan lenders have the same operating mechanism. A financial organisation lends you (the business owner) money for your business. In exchange, your business agrees to repay the loan (principal plus interest and fees) in regular intervals for a predetermined period of time.
Here is a step-by-step guide:-
- Fill out the loan application (either in-person, or online)
- Provide required documentation
- The lender runs a credit check
- The lender reviews the financials of your business
- The lender approves or denies your loan amount, or offers a lower amount
- You sign the required loan documents
- You receive the loan amount in your business bank account
- You use the funds
- You make repayments as per the pre-agreed schedule
IndusInd Bank Business Loans
IndusInd Bank’s Business Loans give you timely cashflow that you can inject into your business to achieve your business goals with ease. Salient features of an IndusInd Bank Business Loan include:
- Up to a 48-month repayment window
- Up to INR 50 lakhs of loan amount
- Minimal documentation, hassle-free processing
- Doorstep banking services
Getting a business loan depends on a few factors. Most banks of repute typically want to make sure that they are lending money to trustworthy borrowers. IndusInd Bank requires the fulfilment of the following prerequisites for their business loans.
- Financial Criteria:
| Minimum Turnover | INR 1 crore in most recent financial year with audited financials for 2 years |
| Profitability | A positive profit before depreciation and tax (PBDT) in last 3 years |
| Paid up capital | Equal to or more than INR 10 Lakhs |
- Non-Financial Criteria:
| Age of the borrower | Between 25 – 70 years (for 2nd generation businesses, borrower’s minimum age should be 21 years) |
| Business vintage | Minimum 3 years |
| Past payment history | A clean repayment history for 12 months for a minimum loan amount of Rs. 4 lakhs |
| Ownership | Property ownership is required |
Take charge of your entrepreneurial dreams and get access to the financial support you deserve. Don’t wait any longer – apply for IndusInd Bank’s business loan today!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information
