How to Get a 10 Lakh Business Loan?

Home » Blogs » How to Get a 10 Lakh Business Loan?

Dreaming about your business venture is like riding a roller coaster – the possibility of being your own boss, nabbing new deals, and work flexibility sounds exhilarating. However, the roller coaster comes to a halt when you realise any business requires significant capital infusion. Capital that might not be readily available. But, don’t get off the roller coaster just yet. A simple Rs. 10 lakh business loan provides the financial backing to jumpstart your business. The money can also be used to expand your existing business. In other words, loans provide some wiggle room for entrepreneurs to exercise creativity without worrying about funding. In this blog, we decode the business loan application process and take you closer to your dreams.

Benefits of a 10 Lakh Business Loan

• Recruiting your A-team

Use the loan amount to hire the right talent and create your dream team. The team members take the load of day-to-day operational tasks, freeing you to focus on more mission-critical business activities.

• Marketing

Some businesses use business loans to boost their marketing and advertising efforts. In turn, the business generates more revenue and better ROI compared to the outgoing loan interest amount.

• Business Expansion

Loans allow flexibility to rapidly expand operations by increasing production capacity, hiring more employees, getting the latest machinery, and opening new stores.

• Cash Flow Management

Business loans improve the cash flow during economic downturns and help sustain their operations during cash crunches.

Eligibility Criteria for 10 Lakh Business Loan

Loan officers go through an eligibility criteria checklist before discussing the loan amount. Now, the criteria are different for different financial institutions. This can cause undue tension during already stressful times. So, how do you gauge the business’ eligibility before applying for a Rs. 10 lakh business loan? Wipe away those stress wrinkles as we have compiled a list of the most common eligibility criteria to make things easier for you.

1. Credit Score

All businesses have their own PAN card as they are separate entities. Naturally, they have a credit score that is separate from your own. A simple business credit score check offers a detailed history of the organization’s past and ongoing debts. While a minimum score of 700 is recommended, some institutes offer loans with a minimum score of 650. It is best to check the bank’s loan policy before moving ahead with your application. The loan applicants’ credit score is considered when the business has no credit history.

2. Business Vintage

Now, some loan providers have a business vintage policy that disqualifies new businesses. Business vintage describes the business registration date and how long it has been operational. The most common business loans require a minimum business vintage of 2 years. However, the criteria can be overlooked if you have a stellar credit history and a solid business plan. Start-up and MSME business loans don’t require business vintage documents and are easily disbursed, provided your business fulfills other criteria.

3. Business Plan

Next up, a business plan builds confidence and reassures the loan officials that you’ll pay back your dues. A good business plan contains,

Short-term and long-term business goals

Purpose for business loan

List of revenue-generating activities

Repayment plan

Consult a finance professional before creating a business plan. They’ll help you predict the future cash inflow and the ROI on your loans. After all, a professionally attested business plan holds more credibility during negotiations.

4. Collateral

Collateral is a personal or business asset that you promise to hand over to the lenders if you fail to repay the loan. However, it is not a necessity. Multiple financial institutions offer unsecured business loans up to Rs. 10 lakh without any collateral.

5. Debt History

A debt history includes timely repayment of existing loan EMIs and completed loans. A good debt history increases your chances of getting a loan.

Documents Required for a 10 Lakh Business Loan

No matter how trustworthy you look, bank officials are not going to take your words as proof – they require tangible proof. Thankfully, there are multiple documents that you can furnish to support your claims

And, trust us, these documents are so much better than just saying, “I swear, I’ll repay the loan.”

Here’s everything you require while applying for a business loan.

Also, Read: How to Get a Business Loan on Low Credit Score?

Interest Rate for a Business Loan of 10 Lakh Rupees

The interest varies depending on your eligibility criteria, loan tenure, loan amount, relationship with the financial institutions, and loan type. However, most business loans offer rates between 9% to 25%.

Let’s understand this with a few examples.

Example 1:

Banks might charge higher interest rates if a person barely qualifies for the loan. However, the same person can negotiate for a lower interest rate provided they have a long-term working relationship with the bank.

Example 2:

MSME loans have lower interest rates, but they have shorter repayment periods and lower loan amounts. On the other hand, startup loans have longer repayment terms but have higher interest rates, which can go up to a staggering 44%.

As you can see, interest rates are influenced by a combination of various factors. To get the best interest rates on your Rs. 10 lakh business loan,

• Have a working relationship with the bank
• Select a repayment tenure of 5 years or less
• Have a credit score of 750

Repayment Plan for 10 Lakh Business Loan

A strong repayment plan gives you an idea about how much expense the business incurs during the loan tenure. Use online calculators to calculate your EMIs with ease.

For your benefit, we have inserted an EMI calculation below to help you visualize how much you’ll be repaying.

NOTE: These are only estimates, and the actual number will vary depending on the loan terms. Additional factors to consider before applying for a business loan

There are a couple of other things you need to consider before applying:

Guarantee

Some banks may require a personal guarantee, also known as a guarantor. This person becomes liable for the remaining loan amount if you fail to pay your dues on time.

Hidden Charges

Check for any processing, transaction and hidden fees, before applying for the loan.

At the risk of sounding like those super-fast mutual funds advertisements, please read the documents related to your loan carefully before proceeding.

Also, Read: 25 Business Ideas Under 5 lakh Investment In India

How to Apply for a Business Loan of Rs. 10 Lakh?

After you have prepared yourself with all the documents, follow the steps below to apply for the loan.

• Check the online loan application portal
• Login with your credentials
• Fill all the necessary details
• Upload all the required documents
• Submit the for

For offline loan applications, visit your bank branch and discuss with the loan officers. They’ll guide you through the next steps.

Applying for your Business Loan on Credmudra

Even with all the preparation in the world, business loans take a few weeks to get approved unless you are using Credmudra.

Credmudra is a loan aggregator that connects ambitious entrepreneurs with business loan providers. What are the benefits?

• Disburses business loans on the same day
• Reduces research time by automatically suggesting the best loan providers based on your profile
• Reduces stress with an easy documentation process
• Offers flexible loan tenure for easier repayment
• If you were nervously biting your nails thinking about the business loan process, give those beautiful nails a rest and visit our website to learn more.

Apply on Credmudra, check your eligibility and get your business loan.

Also, Read: Pros and Cons of Business Loan

FAQs

1. What is the EMI for a 10 lakh business loan?

The EMI differs based on interest rate and loan tenure. For example, the EMI for a Rs. 10 lakh business loan with a 12% interest rate and repayment period of 3 years is around Rs. 33,314.

2. Are there any Government Schemes for Rs 10 Lakh Business Loans?

Yes, the Pradhan Mantri MUDRA Yojana offers Rs. 10 lakh business loans to MSME businesses.

3. Can you get a Rs. 10 Lakh Business Loan without Collateral?

Yes. Some banks offer business loans without collateral as long as you are fulfilling the other eligibility criteria.

4. Can you get a Business Loan with your Salary Pay Slips?

Yes, in the case of a new business with zero credit history, the applicant’s pay slips act as income proof. Can you get a business loan with ITR? It depends on the bank’s policy. However, ITR is a must-have for anyone looking to start a business

5. Can you get a Business Loan with ITR?

It depends on the bank’s policy. However, ITR is a must-have for anyone looking to start a business