A business line of credit offers flexible financing to manage cash flow gaps and meet short-term needs.
A Business Line of Credit (LOC) is a flexible financing option designed to support businesses with varying financial needs. It provides access to a pre-approved credit limit, allowing businesses to withdraw funds as needed. Unlike traditional loans, interest is charged only on the amount used, making it a cost-effective solution.
An LOC for business offers flexible borrowing to manage cash flow, inventory purchases, or seasonal expenses. Businesses can easily apply for a business line of credit through a simple online process. It offers competitive interest rates and flexible repayment terms for quick and reliable access to funds.
Here’s a breakdown of the interest rates and charges for a business line of credit on Bajaj Markets:
Partner Name |
Charge Type |
Details |
U GRO Capital |
Interest Rate |
Starting at 26% p.a. |
Processing Fee |
Nil |
|
Conversion to Loan Charges |
Interest charged is increased to 32% p.a. |
|
Bounce Charges |
₹750 + GST |
|
Late Payment Charges |
36% |
Disclaimer: The charges mentioned above are indicative and subject to change at the lender’s discretion. Please verify the latest details with the lender before applying.
Here’s everything you need to know about the key features of a business line of credit:
Businesses can access funds instantly, often up to ₹2 Lakhs, to address immediate financial requirements.
Get a business line of credit online with no additional processing charges, ensuring cost-effectiveness.
Convert the credit utilised into an EMI-based loan with flexible tenures such as 3, 6, 9, or 12 months.
Applications require only essential personal and professional documents, which can be submitted online.
Borrowers can often enjoy a grace period of up to 5 days each month. This allows them to pay dues without facing penalties.
Here’s a quick overview of how a business LOC works:
Lenders evaluate the business’s creditworthiness, financial stability, and collateral (if required) to approve a credit limit. This represents the maximum amount the business can borrow at any given time.
Once approved, businesses can withdraw funds up to the assigned credit limit whenever necessary. This flexibility is great for meeting short-term financial needs. It helps with buying inventory or handling seasonal cash flow issues.
The interest rate for a business line of credit is typically charged only on the utilised amount. For example, if the credit limit is ₹10 Lakhs, and the business borrows ₹2 Lakhs, the lender charges interest only on the ₹2 Lakhs.
As repayments are made, the credit limit is replenished, allowing businesses to borrow again without reapplying. This revolving structure gives you continuous access to funds. It is a reliable tool, like a business line of credit loan.
A business line of credit generally has two distinct phases:
Draw Period: Businesses can withdraw funds as needed during this phase
Repayment Period: Once the draw period ends, businesses repay the outstanding balance, with no further withdrawals permitted
To qualify for a business credit line, applicants must meet eligibility criteria demonstrating business stability and financial health.
The business must be a proprietorship, partnership, private limited company, or other recognised legal entity
Most lenders require the business to have been operational for at least two years to demonstrate stability.
The applicant should typically fall between 21 and 65 years.
The applicant must be self-employed and actively involved in managing the business.
To get a business line of credit, applicants must provide the following documents:
PAN card
Aadhaar card or any government-issued identity proof
Udyam Aadhaar certificate
GST registration or equivalent business registration documents
Financial statements
Bank statements
Other documents showcasing the business's operational and financial health
Here’s a comparison between a business line of credit and a business loan:
Aspect |
Business Line of Credit |
Business Loan |
Definition |
A revolving credit facility where funds can be borrowed as needed |
A lump-sum loan disbursed upfront for a specific purpose |
Borrowing Limit |
Offers a pre-approved credit limit, reused upon repayment |
Fixed loan amount approved during application |
Interest |
Charged only on the amount utilised |
Charged on the full loan amount, regardless of usage |
Flexibility |
Highly flexible, funds can be withdrawn multiple times |
Less flexible, provides a one-time disbursement |
Repayment Structure |
Revolving credit with variable repayment based on usage |
Fixed EMI payments over a predetermined tenure |
Approval Process |
May involve periodic reviews of business performance |
Approved once, based on the initial application |
Tenure |
Can be ongoing or limited to a specific draw period |
Fixed loan tenure determined at approval |
Collateral Requirement |
May or may not require collateral, depending on the lender |
Often requires collateral, especially for higher amounts |
Use Cases |
Ideal for managing cash flow gaps and short-term expenses |
Suitable for large investments or long-term projects |
Choosing the right platform for a business line of credit ensures smooth access to funds and favourable terms. Bajaj Markets provides flexible and reliable financing solutions tailored to your needs.
Here is what makes it a trusted choice for you:
Get an easy business line of credit with minimal documentation and a hassle-free online application process.
Upon approval, businesses can access funds quickly, ensuring no delays in meeting their financial needs.
Bajaj Markets provides access to lenders that offer attractive interest rates, helping businesses reduce borrowing costs and manage cash flow efficiently.
Businesses can pay back the borrowed money based on their financial ability. Repayment terms are flexible and can meet different needs.
Applying for a business line of credit on Bajaj Markets is simple and hassle-free. Just follow these steps:
Click ‘Apply Now’ on this page
Fill out the form with your essential personal and business information to initiate the process
Choose a lender from the options available on Bajaj Markets that best suits your financing needs
Specify the required credit amount and select a repayment tenure that aligns with your business goals
Complete the application process by submitting the form online for quick processing
Once submitted, your application will be reviewed, and a representative will contact you to complete the process.
The credit limit varies by lender and is based on the business’s financial health, turnover, and eligibility criteria.
Repayments are made on the borrowed amount with interest, and the credit limit is replenished as payments are made.
It is best for handling short-term money needs. This includes cash flow gaps, buying inventory, or covering unexpected costs.
Most lenders require a good credit score, typically around 650 or above, but criteria can vary.
Approval timelines depend on the lender and the documentation provided, often ranging from hours to a few days.
LOC stands for Line of Credit, a flexible financing option allowing businesses to borrow up to a set limit as needed.