Commercial Loan Interest Rate

Commercial loans have always risen in fulfilling every type of business financial needs. Whenever a company is looking to open a new branch, add to inventory for seasonal demand or purchase new equipment for their business, applying for such requirements, a commercial loan is quite helpful. The income generated from such revenues goes towards the repayment of the loans, and this leaves a good sum for you to use. Being a business owner, you can achieve your business goal without having to spend anything from your personal savings. All you need to do is look at all the options available for the loan and apply for the same. In order to successfully apply for it you need to make sure you have the required documents and you and your business fit in the eligibility criteria set by the lender.

Who Can You Apply for a Commercial Loan?

This loan can be applied by a partnership firm, a proprietorship, a private limited company, a public limited company, or any other valid entity. These loans are provided by banks and other lending institutions after the submitted reason for the loan has been appraised by the lending institution. For instance, if a dentist applies for a loan for a dental clinic, the bank might visit the premises. To avail the loan, the business owner needs to have a current account with the bank in the name of the company needs to be activated. Apart from the balance sheet and the profit and loss account, the lender will also look at your business cash flow statement.

Eligibility Criteria for Commercial Loan

The eligibility criteria that the borrower will have to meet are very simple. However, it varies from lender to lender, and the type of business for which the loan is required.

  • The business should be profitable or have a cash flow for loan repayment.
  • The business should have been operational for a certain amount of time to be eligible.
  • A track record is important in the credit appraisal process.
  • New businesses are expected to give projections of income for the next five years or more.

Documents Required for Commercial Loan

The documents required for commercial loans vary from one lender to another. Given below are the documents that are required this loan:

  • PAN of the company and the directors
  • Documents of GST returns if the business falls under the GST income limit
  • Annual bank statements that includes balance sheet, profit & loss account, and cash flow statement
  • Bank statements for the last six months or more
  • Proof of business operations, such as trade license
  • ITR (Income tax returns) of the company and the directors
  • Registration papers of the company with the local authorities
  • Board resolution relating to the lending process.
  • Memorandum and Articles of Association of the company
  • Insurance for the fixed assets of the company

Rate of Interest on Commercial Loan

Commercial loans interest rate usually vary depending upon the nature of the credit. The rate of  interest on unsecured loans are slightly higher due to a higher risk involved in sanctioning this loan. Commercial loan interest rates depend on a host of parameters that includes the lending institution, security offered, turnover of the company, creditworthiness of the borrower, etc. Interest rates can vary depending on the risk assessment by the lender and other norms specified by regulations. Other charges such as loan processing fees, legal charges, late payments fees and other costs are mentioned in the loan agreement. Hence you need to go through the loan agreement and understand all the terms when applying for this loan.

Benefits of Commercial Loan

  • Help Sustain and Grow your Business

Many of the lenders do not specify the uses of the loan amount, this gives the borrower versatility to utilize the funds as per the needs of their business. So, when you are taking out a loan for your business, you don’t have to worry about any other thing except the goal which you have set-up for your business.

  • Funds For Equipment and Tools

The quality, overall productivity of your business can be enhanced with the use of newer technologies and tools. Commercial loans can help finance small businesses to invest in new technology that would give them a competitive advantage.

  • Inventory Management

The loans can come in handy when it comes to inventory management for the business. Sometimes, small business owners hesitate to take up big orders as that will require enough raw materials for production of the final product. Small business owners can apply for a commercial loan to buy the necessary inventory much ahead of time.

  • Increase Working Capital

Businesses require working capital to survive in tough times. Whether it is a micro, small, medium or large scale business, it is critical for a business to have healthy working capital. The funds acquired from commercial loans can take care of unforeseen payment delays or other such situations and balance out the adverse financial implications.

Thanks to the rise of online lenders and marketplaces, there are now more customizable options when it comes to acquiring capital for your business. For business financing, you also have the option to apply for a loan at Finserv MARKETS. You can get small business loans at attractive interest rates for undertaking various business operations, such as an expansion of your business, acquisition of other companies, buying high-value and getting new machinery or equipment, etc. You can check your CIBIL score for free before applying and also obtain a Financial Health Check Report (FHCR). Bajaj Finserv Business Loans available on Finserv MARKETS are collateral-free, which means you do not have to put your personal or business assets on the line to get the finance for your business. With the Finserv MARKETS App, you can get pre-approved offers for an instant loan with ease. Getting a business loan can be a great monetary source to support your business.

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