How to Get a Small Business Loan in Delhi?
Nov 14, 2022
Delhi is India’s capital and one of the largest cities in the world. With new start-ups emerging here every day, it has become one of the most attractive destinations for job seekers in India. Getting a small business loan has become easier if you are trying to start your business or expand your existing one.
With a proper business plan and repayment plan, you can get a business loan in Delhi with or without any collateral. There are several government schemes like the Mudra Yojana. Also, commercial banks and non-banking financial corporations (NBFCs) can help you get a business loan.
Types of business loans:
Before moving ahead, let us learn which business loans you can get. Otherwise, applying for a loan may cost you more money on interest, and choosing the wrong loan plan can harm your business’s credit score, decreasing your chances of getting further loans.
The highest number of business loans applied from Delhi are term loans. The loan repayment tenure for term loans is generally five years, but you can get an extension if the lending institution sees fit. Most of the term loans are unsecured; however, secured term loans are also offered if the applicant requires large funding. Generally, zero collateral or security is required to avail of unsecured business loans.
Invoice discounting allows medium, small and micro enterprises (MSMEs) access to instant cash flow. In this business loan, the enterprises sell their bills or invoices to banks or NBFCs. Then the institution provides instant cash to the business, marginally less than the original bill amount to the enterprise.
This is useful as most of the bills and invoices have due dates of a minimum of 30 days and/or up to six months. Invoice discounting can be used when a business requires an immediate cash flow but does not want to wait until the customer pays to ensure they deliver their agreements.
In this procedure, the banks or the NBFCs become responsible for receiving full payment from the client on behalf of the business to whom they have lent the money.
Letter of credit:
A letter of credit (LC) is provided by a bank, guaranteeing that a payment to a seller or service provider will be received in full and on time. If the buyer fails to pay the seller or service provider, the bank will be responsible for paying in their place. Sellers and service providers often require an LC to ensure they get paid in full and without hassle.
Loans under government schemes:
PM Mudra Yojana is one of the most popular business loan schemes introduced by the government to fund, develop, grow and promote MSMEs across India. Under this business loan scheme, borrowers can apply for loans up to Rs 10 lakh and repay them in one to five years.
These are collateral-free loans. For Mudra Yojana, no collateral or security is required by the banks or NBFCs from the borrowers, as the Union government backs it. The lending institutions charge zero to minimal processing fees or foreclosure fees.
Overdrafts are mainly used to tackle short-term business requirements. Overdraft facilities from banks allow their customers (generally business or current account holders) to withdraw cash even if the account balance is zero or below.
The overdraft limit and interest rates are set at the time of account opening. The interest rate is charged only on the utilised or borrowed amount, and the sanctioned limit of borrowing gets renewed generally with the commencement of the new financial year.
Now that you know what business loan suits you best let us move into the application procedure.
Steps to apply for a business loan in Delhi:
Follow the below steps to apply for a business loan in Delhi:
- Visit your preferred bank/NBFC’s website or mobile application and go to the business loan application page/segment. For Flexi Loan, you can click here.
- Check out the best offers they are offering and select that.
- Suitable business loan deals will be displayed on the screen.
- Select the best-suited loan deal for your needs.
- Carefully fill out the application form.
- Generally, a loan agent will call you at your preferred time (generally within 48 hours) and proceed with the loan formalities.
- The loan agent will collect the required documents from you for processing your application.
- After the documents are verified and you agree on the interest rates and terms, the loan will be sanctioned within a specified working day.
- After the business loan is sanctioned, the loan amount will be credited directly to your business’s bank account.
If you are going with Flexi Loans, you need to provide your mobile number and turnover, and our agent will call you back for a smooth loan facility.
Prerequisites for getting a business loan:
There are specific procedures every institution follows before your loan approval. There are certain criteria you need to fulfil too. The banks or NBFCs will check out your business and personal documents like your business licence, PAN or TAN card, previous loan details (if any), and bank details.
1. To evaluate your financial conditions, the banks and NBFCs need your bank statements for the last six months. You may also need to submit income tax returns for the last three years.
2. Verification of your PAN card along with at least one government ID (like the Passport, Voter’s ID, or Aadhar Card) and one proof of address (Ration Card, electricity bill, water, or gas bill).
3. You must also furnish your business or trade licence, business PAN or TAN Card, etc.
4. If you are in a partnership firm, you must furnish the business deeds and proof of proprietorship.
5. In some cases, if you are taking a business loan in Delhi to expand your existing business, you may have to submit your firm’s Income Tax returns.
6. Often, some government schemes allow lower interest rates for the SC/ST/OBC community. So, if you have a caste certificate, you may use it to get better loans.
Sometimes, banks and NBFCs only offer loans to a specific age category. The institutions generally provide loans to people aged between 22 and 65.
Type and duration of business:
Sometimes, your business type can become a factor in getting a business loan. As to the banks and NBFCs, some businesses are not eligible for funding.
Secondly, the duration of your business is very important. Most banks and NBFCs deny your loans if your business is less than two years old. So, if you plan to start a business solely by taking a business loan from a bank or NBFC, you might not get one.
Sometimes, the business loan approval can take a long time, depending on your loan amount, loan approving institution, and processing time. But there are several online NBFCs active in India offering less processing time and a high amount of loan at affordable interest. You can get a loan within 48 hours at Flexi Loans at 1% interest! Contact us today to know more.