Types of Small Business Loans
The feeling of doing something on your own, on your own terms cannot be compared. Like all other good things in life, starting something can be extremely time consuming and tough. Since you are responsible for every little thing you have to make sure you take care of every little detail. The first major hindrance any entrepreneur may come across in money.
Let’s find out more about the small business loans available in India. There are many types of business loans in India and the good news is the application process is a lot more streamlined than you think! A loan for any amount is handled by loan officer who is your touch point for the entire process. The different types of small business loans and other loans are given below.
To begin with we have loans that are offered by the government of India. The government of India knows that the strength of the economy lies in new business ventures and ideas. The small business loans offered by the government depend on many factors such as the business plan, repayment schedule and the background of the applicant. There is no upper limit t amount of money that the government can loan to an individual as long as the business is relevant and the candidate is deemed worthy. Small business loans are offered to minorities, elderly people with legitimate business plans etc. Next we have loans offered by banks and other financial institution. Small business loans are given to two categories of working people.
The first being trader, retailers and the other being skilled professionals. Professional small business loans are offered to lawyers, doctors, architects, chartered accountant and other individuals you have been studied or received extensive training in a particular field. In this type of loan the professional offers a service. The loan amount can range from 20,000 to 20, 00,000 and interest rate varies, depending on the bank. The documents that you need for a professional loan are Proof of Identity which can be either be your Passport copy, Voters ID card, Driving License, An address Proof like your ration card or telephone bill, a copy of your bank statements for the last six months, your education qualifications, income tax returns, proof of continuation like a Trade license or Establishment or Sales Tax certificate and other documents like Sole Proprietorship, Partnership Deed etc.
The next types of small business loan are meant especially for traders who want to buy or sell goods. Traders require money for various purposes like purchase of stock and machinery, working capital, importing goods etc. Like a government loans there is no upper limit for a trade loan. Some people borrow in corers! While the documents remain more or less the same as a professional loan some banks may need a security that acts like collateral in case of non repayment. The interest rate, repayment schedule depends on the bank and the customer’s profile, earning capacity etc.
