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.
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.
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.
Here is the list of documents needed to get the secured business loan:
Business ownership proof
Financial statements from the bank
ID proof: Passport, Driving Licence
NREGA issued Job Card and signed by the State Government
National Population Register letter
Balance transfer documents, if applicable
The types of secured small business loans are:
Secured term loan
Letter of Credit
Farm or Dairy loan
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:
Secure Business Loan
Unsecured Business Loan
Secured loans need security to be deposited.
Unsecured loans do not need security to be deposited.
Secured business loan interest rate is low and affordable
The interest rate is more
The repayment term of the secured loan is longer and more flexible.
The repayment term of the secured loan is not as long and flexible.
You get Tax benefit
No tax benefit
More loan amount
Less Loan amount
A Secured Business Loan is funding in which the borrower needs to submit a personal guarantee or collateral. This loan offers benefits to small business owners. They get funds to maintain their professional and personal expenses.
To apply for a business loan, you will have to meet the eligibility criteria such as 21 to 70 age, Indian citizenship, good credit score, experience in running the business, and more.
Business loans can be secured or unsecured. In a secured loan, the borrower needs to provide an asset or collateral, such as a plot, property, equipment, vehicle, etc., and get the loan. In the unsecured loan, the borrower need not submit the collateral. However, in the latter, you get a loan at a higher interest rate and lesser tenure.
The secured business loan interest rate is different for different banks and NBFCs. Bajaj Finserv offers an interest rate ranging from 13% to 16% for the secured business loan.
To avail of the secured business loan, the collateral can be property, land, plant, machinery, vehicle, equipment, stock, raw material, gold, etc.
Most banks and NBFCs allow the maximum repayment tenure of 10 years in the case of a secured business loan. Bajaj Finserv allows a repayment tenure of 12 years.
Different lenders offer secured business loans of different maximum loan amounts. Bajaj Finserv provides a loan of up to Rs. 75 Lakhs at attractive interest rates to match your business needs.