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Business Loan in Hyderabad – Eligibility, Documents Required, Benefits, Checklist

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There are different types of loans that we have come across in our day-to-day life like Car Loans, Home loans, Personal loans, Student loans, Secured and Unsecured Loan and then finally comes our Business loans. As our nation is progressing, businesses are growing rapidly. As India’s economy is growing there is a rampant growth in entrepreneurship, industries, manufacturing, innovation, and technology.

In order to maintain the operations of their respective businesses, the businessman needs funds to maintain the flow and the rhythm of his/her business. So, these funds are provided by the various institutional banks & investors to the respective entrepreneurs. Growth is imperative in business.

In order to maintain and establish their own essence and presence in this cutthroat competitive market, businesses have to maintain an increasing graph in terms of revenue and profit. From innovative solutions to your performance marketing and strategy, there are many ways to improve the revenue of the business. But sizable capital is required to do all that.

What is a Business Loan?

A Business Loan is a loan specifically intended for business purposes. The main intent behind taking a Business Loan is the expansion and the growth of the business. A business loan helps you to raise capital for your venture.

There are two major sources to get a Business Loan that is Banks and non-banking financial companies (NBFCs).

As we know, Hyderabad is the capital city of the Indian states Telangana and Andhra Pradesh. Hyderabad is one of the most developed cities of India and it is considered as the “IT Hub” due to its rapid growth in IT by attracting investments from different MNCs all over the world like Google, Microsoft, Goldman Sachs, Apple, etc and not just this it also has the offices of many Top Indian companies like Infosys, TCS and HCL and some other major Indian startups. Along with this, it has also excelled in the domain of pharmaceutical enterprise and various other domains.

To fulfill their dream of opening new businesses under their own names, people of Hyderabad reach out for various lending options like unsecured business loans, MSME loans, term loans, or working capital loans. There are several financial institutions offering business loans at attractive interest rates for people living in Hyderabad.

Comparison of Business Loan Interest Rates from Top Banks/NBFCs – March 2022

Business loan interest rate starts from 14.99% onwards and is determined as per the eligibility of the applicant.

Bank/NBFC/Fintech Interest Rate (p.a.)
Kotak Mahindra Bank 14% onwards
HDFC Bank 16% onwards
ZipLoan 16% onwards
FlexiLoans 16% onwards
Axis Bank 17% onwards
Fullerton Finance 17% onwards
Bajaj Finserv 17% onwards
Yes Bank 17% onwards
Tata Capital Finance 17% onwards
ICICI Bank 18% onwards
Lendingkart Finance 18% onwards
Hero FinCorp 18% onwards
IIFL Finance 18% onwards
Indifi Finance 18% onwards
NeoGrowth Finance 18% onwards
RBL Bank 19% onwards
SMEcorner 19% onwards
U GRO Capital 19% onwards
IDFC First Bank 20% onwards
HDB Financial Services Ltd. 22% onwards

Note: The mentioned interest rates are subject to change and depend on the sole discretion of the bank, NBFC, SFB, MFI, and RBI. Interest Rates are updated as of Dec 2021.

The interest rate offered is calculated on the basis of the applicant’s creditworthiness, financial capacity, repayment capability, business profitability, cash flows, CIBIL score, loan amount, and inventory. The loan amount depends on the business requirements and the applicant’s business profile.

Business loans can be availed by the following entities residing in Hyderabad that include individuals, self-employed, business owners, entrepreneurs, traders, retailers, manufacturers, sole proprietorship, partnership firms, private and public limited companies, limited liability partnership and professionals, such as CAs, nurses, doctors, women entrepreneurs, etc.

Now, let us know about one of the most important aspects of this article is the eligibility criteria for the business loan. It’s not as easy as we think to get a Business loan. There are certain conditions and criteria that we have to fulfill in order to get a Business Loan. So let us see about those criteria.

Business Loan Eligibility Criteria in Hyderabad

  1. The candidate must be a citizen of India with no criminal record.
  2. Age Criteria: Minimum 21 years at the time of loan application and 65 years at the time of loan maturity.
  3. Businesses should possess all documents that adhere to state laws and the documents must be authenticated.
  4. Candidates applying for unsecured business loans must pay a higher interest rate as compared to others but no collateral.
  5. Business Existence: Minimum 1 year from the date of incorporation. This can vary from bank to bank. For the majority, it lies between 1year <Existence<3 years.  
  6. The eligible monthly or annual turnover amount of a firm shall vary from bank to bank
  7. Financials that include profit and loss and taxes shall be available
  8. Candidates applying for secured loans shall pay a lesser interest rate but have to submit collateral.
  9. There are various firms that expect the candidates to have a certain CIBIL score. Your CIBIL score should be greater than 685 or higher. It totally depends upon the Bank.
  10. The business should have a Minimal Annual Income (ITR) of Rs. 1.5 lakhs per annum. (Again this varies from bank to bank)

Note: The Eligibility criteria for Business Loans in Hyderabad vary from Bank to the bank. Every bank has different age criteria, CIBIL score limits, ITR, profits, etc. But we have tried to generalize all those possibilities so that we can have a generalized perception of them. Now we have completed the eligibility criteria.

Now, let’s jump to the next point which is also very important, that is the document required while applying for the business loan. There are many necessary documents that are needed in order to get business loan approval. These are some documents that need to be authenticated before applying.

Also, See:

Documents Required to take Business Loan in Hyderabad

  • Latest Passport size photo of the applicant (2 copies)
  • Business Plan with a proper prototype
  • KYC Documents: PAN Card, Aadhar Card, Voter’s ID card, Passport, Driving License
  • Business owner or partner details (Identity, Age and Address Proof of owner or partner)
  • Residential address proof: Passport, Rent Agreement, Driving License, Voter ID Ration Card Tel/ Electricity Bill/ Lease agreement/ Passport.
  • Business address proof: Establishment Registration or Sales Tax Certificate and Trade License
  • Last 6 months’ salary slips if employed Last 1-year ITR and certified P&L and bank statement
  • Business KYC: GST Registration Certificate or Shops and Establishment Certificates

Additional Documents

  • Memorandum of Articles (MoA) & Article of Association (AoA)
  • Declaration of ownership
  • Power of Attorney
  • Any other documents required by the bank or NBFC

Documents required for Business Loan in Hyderabad

 

How to Calculate Business Loan EMI?

The Business Loan EMI calculation is done on the basis of a simple formula i.e.

E = P x r x (1+r)n/(1+r)n-1

  • Here, ‘E’ is the EMI
  • ‘P’ represents the loan amount
  • ‘r’ stands for the interest rate offered on a monthly basis
  • ‘n’ is the duration of the loan

A business loan EMI calculator is a digital version of this formula, that allows you to calculate EMI amount through a web interface. The business loan EMI calculator can help you understand the breakdown of interest and principal loan amount, thus, allowing you to decide the layout of your cash resource planning. This helps you to find the business loan EMI with the help of this calculator. It is one of the best ways to know the calculations.

Do’s and Don’ts of Business Loans

A business loan can be a great source of capital for the growth of your venture, but it can also be a path to ruin if you do not plan certain aspects with care. SME loans tend to have a shorter repayment cycle, which means applying for too high a loan amount will inadvertently increase your EMI amount.

If your business runs into a period of low sales or your invoices get delayed, servicing the loan can become difficult and cause a debt pileup. Therefore, there are some things you should consider before applying for a business loan.

Do Borrow What You Need

The next most important thing to know when looking for financing is how much you need. Not a ballpark figure. Not a guesstimate. You will need to provide a full review of your projected costs and revenue, preferably with positive and negative projections.

Too much money can leave you with debt that you need to repay, but low-balling your costs could leave you facing a cash crunch when unexpected expenses arrive.

DON’T Focus on Interest Rates

Although the interest rate is important, it is just one component of a loan. Instead, think about this:

  • Do you know what the period of time for repayments will be?
  • How much will the financer be willing to lend based on your assets?
  • What is their flexibility on repayments?
  • What loan term is the lender willing to offer?
  • What percentage of the cost of your asset is your lender willing to finance?
  • What is the lender’s flexibility on repayments?
  • What guarantees are being asked from you in the case of default?

As you can see, the interest rate on your business loan is important, but it’s far from the whole story.

DON’T Pay it Back Too Fast

Yes, loans are debt. But, there are good debts and bad debts. And repaying a loan too quickly can harm your business, leaving you short of available funds to grow your business.

Look at your statements and compare how much you would save in interest if you were to repay it earlier, with your projected return on investment of the loan – taking into consideration if there are any other ways you could invest that projected income.

DO Keep Track of Your Numbers

As a busy entrepreneur, bookkeeping can take the back seat to the rest of your operations if you let it. Paid invoices get stuffed in a drawer. Purchases get made on both your personal and your business credit card, etc. These are bad business habits that you need to stop.

Not keeping track of your financial records can leave you in the dark about how your business is actually performing. It also makes it difficult for a lender to assess your viability without documentation and trust your responsibility for repayments.

Being diligent about keeping your financial records up today, and even hiring an accountant, will not only benefit your business when looking for financing but will also help you keep track of your money and make sure you are spending it wisely.

Benefits of Taking Business Loan in Hyderabad

Flexibility

You can choose from various types of loans to fulfill specific business requirements. Various government schemes such as CGTMSE and other similar schemes offer business loans that are designed for MSEs for starting, expanding, or upgrading the facility. Government schemes such as CGTMSE do not require any security or third-party guarantee. The guarantee cover is provided to the financial institution by the trust itself.

Convenient Repayment

The flexible nature of business loans reflects in their repayment options as well. Banks offer such flexibility because they understand the complexities involved with businesses and their plans are designed accordingly. They may offer a repayment plan as per the cash flow to avoid difficulties in financial management.

Also, borrowers may increase or decrease the EMI as per the financial condition of the company. They can also choose bullet payments for periodic repayment.

Grow Your Business

Finance, manpower, and technology are the essential needs of any business. Among all of them, finance is a key aspect that makes it possible for a business to ensure all the other needs are met. Thus, the required cash flow can be highly crucial for expanding a business as it can be used for different purposes to grow your business.

You can arrange another facility or purchase the required equipment to speed up your business. In addition, owners also have the freedom to use the money as per their preference. It enables them to utilize the funds according to the needs of the business.

Frequently Asked Questions on Business Loan in Hyderabad

1. What is a Business Loan?

Whether you are new to the business, experiencing a slowdown, need funds to ensure cash flow, access to working capital, hire new employees, buy new equipment, or expand your business, no matter what your business plans and needs are, our Business Loans can help you get quick funds when you need them the most.

Business Loans are designed to meet your financial needs with flexible repayment options and customizable loan options to keep you growing your business. Getting money to meet your immediate needs is simple, secure, and easy with our unsecured Business Loans.

2. What are the Benefits of Taking a Business Loan?

Faster processing

Faster processing means faster credit for your business, allowing you to explore new horizons and exploit opportunities as they come your way. A timely business loan can expand your marketing potential, speed up your operations, and eventually increase your profit margins.

Preserving your ownership

Since it is an unsecured business loan, you are at no risk of losing valuable assets or giving up precious company stock in lieu of investment. So, a business loan allows you to preserve your ownership while also providing you with the funds to grow your enterprise.

Improve your credit score

An NBFC loan from Lendingkart is the best way to improve your business credit score as we report loan accounts to all credit bureaus. Moreover, a business loan is especially beneficial for companies witnessing a recent dip in credit score due to unforeseen market conditions.

3. Why should I take a business loan?

Whether your business is at an initial stage or in the growth phase, an infusion of finance can help you get the needed momentum. You can get a business loan for your short or long-term financial needs, be it to address working capital shortfalls, buy machinery or equipment, purchase inventory or raw materials, pay staff or vendors, start marketing, book business travel, and more.

4. Can a salaried person get a business loan?

The minimum age of the applicant is 23 years & the maximum age of the applicant is 55 years. In the case of a salaried applicant, the applicant must be working at MNCs, public companies, or any private reputed company. The monthly income of the salaried applicant should be greater than ₹25,000.

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