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Types of Business Loans Available in India

  • Highlights

  • There are 3 types of business loans you can get in India

  • Professional loans are loans for self-employed professionals

  • Working capital loans help meet your working capital needs

  • Machinery loans are used to purchase, repair, or upgrade equipment

The small and medium enterprise (SME) sector accounts for 45% of industrial output and 40% of exports, making it a major driver of economic growth. It also employs the second largest workforce after the agricultural sector.

Recognising this sector’s significance with respect to economic growth, the government has made a lot of effort to push this growth. One aspect of this is the types of business loans available to them. These loans usually come in either secured or unsecured formats, depending on whether collateral is required or not.

Aside from the secured an unsecured format, business loans are essentially divided into:

Professional loans

Working capital loans

Machinery/equipment loans

1. Professional Loans

Professional loans are loans for self-employed professionals like doctors, CAs, engineers etc. They are designed to assist these professionals grow their practice, and are offered by both banks and non-banking financial companies (NBFC) based on the borrower’s credit history. There are specific professional loans for doctors, CAs and engineers.

Professional loans can be secured or unsecured, and may be offered in a Flexi loan format. This means that the borrower can borrow any amount they need within a loan limit, and pay only the interest for the borrowed amount as EMI. They also come with fairly flexible tenors, and provide the option to prepay the amount anytime within the tenor at no extra cost. What’s more, the whole process of application, withdrawal, and repayment can easily be done online.

2. Working Capital Loans

Working capital loans are designed to help you meet your working capital requirements. These are usually short-term, unsecured loans, and come with high loan amounts of up to Rs. 30 lakh. These too may be offered in a Flexi loan format, allowing you a great deal of flexibility in both borrowing and repayment. What’s more you may also get pre-approved offers on your working capital loans, depending on where you borrow from. Both banks and NBFCs offer these loans, and you can easily apply for them online when you are short on capital.

How To Get Small Business Finance From Bajaj Finserv

Financial Habits that will help you get a business loan

As a small business owner, you need to stay on top of your business’s finances, in order to ensure that your business keeps running smoothly and never runs out of working capital for its day-to-day operations. Additionally, you need to ensure that you are able to obtain external financing for your business when the time comes for your business to grow, or take on a large project. Here, we give you a few financial habits that every small business owner should have, that help you get a business loan easily when the time comes for you to apply for a loan.

3. Machinery/ Equipment Loans

Machinery loans are used to either purchase, repair, or upgrade your business equipment. Here too, you may get high loan amounts of up to Rs. 30 lakh in a Flexi loan format. Machinery loans are usually unsecured as well, and may come with pre-approved offers and online access, making them easy and comfortable to avail. Moreover, these loans come with a quick approval and disbursal period of just 24-48 hours. You can approach banks or NBFCs to avail them after checking your eligibility online.

Since funding is one of the biggest challenges SMEs face, the timely access to funds that these loans provide has been a real comfort. Lastly, be sure to have a good business and repayment plan before you apply, to ensure easy approval.

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