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Business Line of Credit (LOC)

You can apply for a business line of credit up to ₹2 Lakhs on Bajaj Markets. Get flexible access to funds and use anytime for your business expenses, helping you manage cash flow smoothly and grow your business.

What is a Business Line of Credit

A Business Line of Credit (LOC) is a flexible financing option designed to support your business with varying financial needs. It provides access to a pre-approved credit limit, allowing you 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. You can easily apply for a business line of credit online through a simple process. It offers competitive interest rates and flexible repayment terms for quick and reliable access to funds.

How Does a Business Line of Credit Work

Here’s a quick overview of how a credit line for business works:

Credit Limit Approval

Lenders evaluate your business's creditworthiness, financial stability, and collateral (if required) to approve a credit limit. This represents the maximum amount you can borrow at any given time.

Accessing Funds

Once approved, you 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.

Interest Accrual

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 you borrow ₹2 Lakhs, the lender charges interest only on the ₹2 Lakhs.

Repayment and Revolving Feature

As repayments are made, the credit limit is replenished, allowing you to borrow again without reapplying. This revolving structure gives you continuous access to funds. It is a reliable tool, like an unsecured business line of credit.

Draw and Repayment Periods

A business line of credit generally has 2 distinct phases:

  • Draw Period

You can withdraw funds as needed during this phase

  • Repayment Period

Once the draw period ends, you repay the outstanding balance, with no further withdrawals permitted

Key Features of a Business Line of Credit

Here’s everything you need to know about the key features of a business line of credit:

Quick Borrowing

You can access funds instantly, often up to ₹2 Lakhs, to address immediate financial requirements.

Zero Processing Fee

Get a business line of credit online with no additional processing charges, ensuring cost-effectiveness.

Conversion to Loan

Convert the credit utilised into an EMI-based loan with flexible tenures such as 3, 6, 9, or 12 months.

Minimal Documentation

Applications require only essential personal and professional documents, which can be submitted online.

Grace Period

You can often enjoy a grace period of up to 5 days each month. This allows you to pay dues without facing penalties.

Business Line of Credit: Interest Rates and Charges

Here’s a breakdown of the interest rates and charges for a business line of credit on Bajaj Markets:

Partner Name

Charge Type

Details

UGRO Capital Line Of Credit

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%

Minimum Tenure

3 Months

Maximum Tenure

12 Months

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.

Eligibility Criteria for a Business Line of Credit

To qualify for a business line of credit, you must meet eligibility criteria demonstrating business stability and financial health.

Here are the details:

Business Type

Your business must be a proprietorship, partnership, private limited company, or other recognised legal entity

Business Vintage

Most lenders require your business to have been operational for at least two years to demonstrate stability

Age of Applicant

You should typically fall between 21 and 65 years

Self-employment Status

You must be self-employed and actively involved in managing the business

Documents Required to Apply for a Business Line of Credit

To get a business line of credit, you must provide the following documents:

  • KYC Documents

    • PAN card

    • Aadhaar card or any government-issued identity proof

  • Business Proof

    • Udyam Aadhaar certificate

    • GST registration or equivalent business registration documents

  • Additional Business Proof

    • Financial statements

    • Bank statements

    • Other documents showcasing your business's operational and financial health

Once you’ve gathered the required documents, submit them along with your business line of credit application for quick processing

How to Apply for a Business Line of Credit

With the online business line of credit available on Bajaj Markets, you can quickly apply from the convenience of your computer or mobile device. 

Just follow these steps:

  1. Click ‘Apply Now’ on this page

  2. Fill out the form with your essential personal and business information to initiate the process

  3. Choose a lender from the options available on Bajaj Markets that best suits your financing needs

  4. Specify the required credit amount and select a repayment tenure that aligns with your business goals

  5. 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.

Business Line of Credit vs. Business Loan

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

Types of Lines of Credit

Here are the different types of lines of credit available:

A flexible loan option for individuals, which allows borrowing up to a set limit for personal expenses. It can be secured or unsecured.

  • Home Equity Line of Credit (HELOC)

A type of credit line secured against the equity in your home. It offers a revolving credit limit and typically lower interest rates due to the collateral.

  • Business Line of Credit

A credit line tailored for businesses to cover short-term expenses or manage cash flow, offering flexibility in borrowing and repayment.

  • Overdraft Facility

A type of credit that allows an individual or business to withdraw more money from their bank account than is available, up to an agreed limit, to cover short-term cash flow issues.

  • Student Line of Credit

A credit option designed to assist students with tuition, living expenses, and other educational costs, often offered by financial institutions with favourable terms for students.

Frequently Asked Questions

What do you need for a business line of credit?

To apply for a business line of credit, you typically need:

  • Proof of business existence (e.g., registration documents, business license)

  • Financial statements, including balance sheets and profit and loss statements

  • Personal and business tax returns

  • Business bank statements

  • Credit history of the business and/or the business owner

The interest rate on a business line of credit can vary depending on factors such as the lender, your creditworthiness, and whether the credit line is secured or unsecured. On Bajaj Markets, interest rates start from 26% p.a..

Some of the risks of a business line of credit include:

  • High-interest rates: If the credit line is unsecured, it may come with higher interest rates
  • Debt accumulation: If not managed properly, it can lead to excessive debt due to continuous borrowing
  • Fees: Many lines of credit charge annual fees, transaction fees, or maintenance fees, adding to the overall cost
  • Over-reliance: Businesses may become reliant on credit to manage cash flow, which can be risky in case of sudden financial setbacks

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 for a small business line of credit 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.

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