Secured Business Loan

If you are an aspiring entrepreneur who wants to start a business venture, then you need to know about the secured business loan. A business loan can help you provide working capital which is imperative to manage your business as well as personal expenses. Most business owners prefer taking a secured business loan to avoid financial crunches. Many lenders offer secured business to small businesses. You can get secured Business Loan as a multi-purpose financing option to provide immediate financial assistance to consumers at a low rate.

The secured business loan needs you to submit collateral so that the lender is assured that you will certainly repay the loan over the given period. The collateral can be the assets like property, plots, machinery, equipment, etc. The tenure of the loan is mentioned in the secured loan document. The secured business loan is offered at an attractive interest rate beginning from 10.45% and more. The borrower can repay the loan in the tenure of 10 years.

Features & Benefits of Secured Business Loan

Here are the best features and advantages of taking a secured small business loan.

• Loan Amount: The secured business loan offers maximum assistance to borrowers who can take a loan amount of more than Rs. 10 Crores. The maximum tenure can be 10 years.

• Flexible Repayment Option: The secured business loan has become one of the common financing options. Many small business owners take the loan easily and opt for the repayment at their convenience. If the mortgage amount is more, the repayment can be extended.

• Loan to Value Ratio: You can get a secured business loan of up to 65% of market value.

• Balance Transfer: Your businesses can also go for the Loan Balance Transfer facility. This facility will enable you to enjoy the loan at a low-interest rate.

• Easy Approval: Getting a business loan is quite an easy task. You can get instant results provided you match the eligibility.

Eligibility for Secured Business Loan

To get the business loan, here is the eligibility criterion that you need to fulfil:

• You must be an Indian citizen.

• Your credit score should be good. Some lenders need more than 650 credit scores.

• Your age must be between 21 years to 70 years at the time of the maturity of the loan.

• The business loan is provided to self-employed people. Individuals, Startup companies, SMEs, MSMEs, Large Enterprises, etc., can apply. Even Proprietorship Firms, Partnership Firms, LLCs, or Limited Liability Companies can avail of the loan.

• You must have had a business vintage of at least three years.

Documents Required for Loan Application

Here is the list of documents needed to get the secured business loan:

• KYC documents

• Business ownership proof

• Financial statements from the bank

• PAN card

• Form 16

• ID proof: Passport, Driving Licence

• NREGA issued Job Card and signed by the State Government

• National Population Register letter

• Address proof

• Property documents

• Balance transfer documents, if applicable

Types of Secured Business Loans

The types of secured small business loans are:

• Inventory Financing

• Asset-based financing

• Secured term loan

• Equipment Finance

• Letter of Credit

• Machinery loan

• Invoice Discounting

• Farm or Dairy loan

Difference between Secured and Unsecured Business Loans

The basic difference between the two is that in the secured loan, the borrower needs to provide the collateral to the lenders or financial institutions such as banks and NBFCs to get the loan. This is not in the case of unsecured business loans. Here are the differences between the two: