How to apply for a business loan in Bangalore?

Ever wondered where the best of start-ups like Flipkart, Dunzo started the first operations? Bangalore it was. The city offers unparalleled love and enthusiasm for start-ups and you can have your share of it with business loans in Bangalore. Suppose you have a dream to open your own business, you may be clueless about the capital access. Then the loan process may not may not pop up for you. Although you might be inclined to take a loan, you could be concerned about getting into debt. 

But the truth is that without the necessary funds, your business may not grow even if you have the best business plan. So let us get to know more about the city of Bangalore and how it rewards businesses at large.

Bangalore: Business Opportunity & Landscape

Bangalore, also known as Bengaluru, is Karnataka’s capital. You may have heard nicknames for Bangalore such as “The Silicon Valley of India”, “Garden City”, and “The Indian Tech hub”. IIM Bangalore, National Law School of India (NLS), and National Institute of Fashion Technology (NIFT) are some top institutes in Bangalore. The city is known for its modern and luxurious lifestyles and somewhat high standard of living. 

One thing you may have heard about Bangalore is its tech industries. It houses startups and national and international tech companies such as CISCO, Google, Infosys, etc. Bangalore also houses other big public sectors such as telecommunication, aerospace, defence organization, etc.

There are many business opportunities in Bangalore. Besides tech companies, it is a booming market for food deliveries, owing to its young population. Other startups such as car rental, Grocery delivery services, and hostels are also on the rise.

These are just some reasons Bangalore is attractive for startups and small businesses. 

Why do you need a business loan?

You would require a business loan for various reasons. While you may initially have funds to put in your business, those funds may deplete as your business grows. Here are some of the reasons to take business loans

Upgrading your equipment: Your equipments may be your loyal servants in the business, but sooner or later, they need to be either optimized or upgraded to keep up with the growing demands. 

Kicking in the expansion phase: A business loan can help you make new adjustments to your setup or move into a new place where you and your employees can work more efficiently. 

Working Capital: Every business goes through highs and lows. There may come a time when your liabilities may outgrow your profit. A business loan can help you pay those dues and keep the business running.

Recruitment: When you are a startup, you might have a small team. Getting a business loan will help you recruit new talented employees that will help the business with revenue and reduce the overall workload.

Reasons you should take business loan in Bangalore

Banglore is a growing city home to many startups. Famous for its IT infrastructure, many other industries are booming. Grocery and delivery services, online retailing, cafes and restaurants, and car rental companies are some examples of growing industries. 

A business loan can breathe life into your business. You can get in touch with the customer support of banks, and they can guide you to secure a business loan that is right for your business. Here are some of the reasons why a loan could make sense to set up a business in Bangalore

Access to the best corporate talent: Big companies attract good talent to Bangalore and you can be in a race to harness some of it.

Attractive rate of interest: The rate of interest in a business loan is lower than in other loans. This is because banks & NBFCs try to provide business loans at an engaging rate to attract more customers. 

Convenience: Availing of a business loan has become more convenient as you don’t have to physically go to the bank and can apply online. 

Flexibility: Both banks and NBFCs offers business loans. They do not intrude in daily business affairs and are only concerned about repayment in time. So you can apply for a business loan without being concerned about banks and NBFC dictating you.

No collateral needed: Most banks & NBFCs provide business loans without the need for collateral. However, many banks & NBFCs do ask for collateral or security before providing you with a business loan. 

Fast disbursal: Most banks & NBFCs need minimum documentation for giving out a business loan, and they also credit the loan amount very quickly.

Which are the best business loans in Bangalore?

So, we can see how beneficial a business loan can be. But, which kind of business loan to apply for? Various factors decide which loan will be best for your business. Here are some forms of loan that you can avail of in Bangalore.

Term loan: if your business generates steady income, you can take this type of loan. Term loans are required to be paid regularly over a set period.

Working capital loan: Working capital loan can be helpful in the everyday requirements of the business. These are collateral-free loans.

Start-up loan: This is self-explanatory. They are perfect for startups and they can take this kind of loan to cover the funds used to establish the business.

Invoice financing/purchasing: It is a type of business loan that is beneficial to small businesses. Here, the loan is given against the business invoices. 

Equipment financing: This loan is useful for businesses that are involved in manufacturing. In Equipment financing, machinery is used as security to take a business loan.

Top 10 Banks and NBFCs that provide business loans in Bangalore

Many banks and NBFCs in Bangalore offer business loans at a lower interest rate. Here are top 10 banks and NBFCs that offer business loans:

ICICI Bank

ICICI bank is a global bank that offers financial services. Their business financing options include working capital loans, finance for importers and exporters, and term loans. They also offer MSME solutions, including GST business loans, loans for new entities, Insta OD, and collateral-free loans.

Some key features of this bank

• Maximum loan amount 40 lakhs and a minimum loan of 1 lakh

• Loan tenure- 12 to 36 months

• Interest rate- 15.50%

• Processing fee-0.99 to 2% 

• Overdraft facility available

• Collateral not required

Tata capital

Tata capital is an investment and finance company in India. Tata capital is among the top banks for getting a business loan in Bangalore. They provide various financing solutions such as MSME loans, Machinery loans, and Working capital loans

Some key features of this bank

• Interest rate- 19%

• Loan tenure- 12 to 36 months

• Range of loan amount- 5,00,000 to 75,00,000

• Flexible EMI options

• Simple documentation process

• No security required

SBI

State Bank of India, or SBI, is a public sector bank and financial service provider. They offer Simplified Small Business Loans (SSBL) to SMEs and other enterprises involved in service activities, wholesale and retail trade, manufacturing, and self-employed.

Some key features of this bank

• Range of loan amount- 10 lakhs to 25 lakhs.

• Interest rate- 8.05% p.a.

• Unified charge- 7500 (that includes documentation charges, remittance charge, processing fee and commitment)

• Repayment tenure- up to 60 months 

Fullerton India

Fullerton India is a good choice if you want a business loan with minimum documentation. They offer a range of loan options such as business loans, SME loans, securities against securities, commercial vehicle loans and two-wheeler loans. 

Some key features of this bank

• Loan amount they offer- Up to 50 lakhs

• Interest rate- 17% (rate of interest depends upon various factors such as net income, location, business stability, current monthly obligations, etc.)

• Loan tenure- 48 months

• Processing fee- 6.5% of the loan amount

• Flexible loan option 

• Minimum paperwork

• No requirement for collateral

Citibank

Citibank is a leading financial services provider. They provide services such as long and short-term loans, MSME loans, working capital loans, overdrafts, and import and export finance. 

Some key features of this bank

• Interest rate- 12% to 18%

• Processing fee- 2% of the loan amount

• Loan duration- 12 to 60 months

• Prepayment charge- 3% to 4% of the amount

• Overdraft and cash credit at an engaging interest rate

Axis bank

Axis Bank is among the top banks in India. It was called UTI bank before its name was changed. It provides loans to new and existing businesses, MSMEs, retail businesses, and SMEs with short- and long-term loan options. 

Some key features of this bank

• Interest rate-14.64% to 18.90% p.a. 

• Collateral not required

• Range of loan amount- 50,000 to 50 lakhs

• Processing fee- 2% of the amount

• Repayment tenure- 1 to 5 years

• 24/7 business loans

• Require existence of business for at least three years

Kinara Capital

Kinara capital is an NBFC that offers various kinds of loans to businesses. Their main goal is to transform the lives and livelihood of the people and companies with their loan options.

Some key features of this bank

• Interest rate- 21% to 30% p.a.

• Loan duration- 12 to 60 months

• Loan amount range- 1 to 30 lakhs

• Flexible loan options

• Disbursement of loan within 24 hours

• Provide customer service at doorsteps

HDFC bank

HDFC bank is among the biggest private banks in India. It provides services like banking, general insurance, life insurance, real estate funding, business loan and educational loans. 

Some key features of this bank

• Loan tenure- 40 lakhs

• Interest rate- 11.90% to 21.35%.

• Processing fee- 0.99% 

• Loan tenure- 12 to 48 months 

• Quick and easy loan disbursement

• Payment of interest rate only on the amount used

IDFC First Bank

IDFC First Bank comes under the ownership of IDFC bank. The business loan they provide includes a working capital loan, FIRST STEP micro business loan, and Commercial vehicles loan. One of the main advantages of applying for a loan in this bank is that they offer business loans that support entrepreneurs, such as upgrading their machinery and helping them with other aspects of the business.   

Some key features of this bank

• Interest rate- 19%

• Loan tenure- 20 to 48 months

• Processing fee- 3.5% of the amount charged at the time loan is provided.

• Collateral-free loans up to 1 crore  

• Fast process of loan approval

• Business should exist for a minimum of 3 years

IIFL finance

India Infoline, or IIFL, is a financial service company based in India. They provide quick MSME loans that may be perfect for your business. To avail of their business loans, the company must exist for three years and have a good repayment history.

Some key features of this bank

• Interest rate- 11.25% p.a. 

• Collateral not required

• Tenure of the loan- 5 years

• The loan amount gets credited into account within 24 hours.

• Attractive EMI option

• They also provide an EMI calculator on their website that will help you calculate the EMI amount, interest payable, and total loan amount to be paid.

Conditions for loan eligibility

A business loan can be taken by self-employed entities & self-employed non-professionals. Mostly all banks have similar conditions for loan eligibility. However, some banks may require additional documents. Given below are some conditions that need to be fulfilled to be eligible for a business loan.

• A minimum of 18 years of age and a Maximum of 65 years is required.

• Entities that are eligible for business loans include Individuals, Sole Proprietorships, MSMEs Partnership firms, Limited Liability Partnerships, Public and Private Limited, Companies, retailers, manufacturers, traders, and other business entities engaged in only services, manufacturing, and trading.

• Profit and loss statements must meet the minimum criteria required by the lender.

• It is necessary to have at least three years of business experience inside the current enterprise.

• Minimum of five years of overall business experience.

• An annual income of 2 lakhs is needed.

• Business should be in profit for the previous two years.

• Income tax return of the last year

• The credit score is required to be 750 or above.

Documents required for a Business loan

You have learned about the conditions that need to be fulfilled to take a business loan. Mostly all the banks require similar documents but again, some banks may require additional documents. Generally, these documents are required to be submitted to banks.

General documents

For Self employed( including Partnership firms and private Ltd. Co) documents needed are:

For self employed individuals (Professionals), documents needed are:

For non-professional self-employed individuals, documents needed by the bank include

• Individual identity proof

• ITR of 3 years

• Three years of Sale tax returns

• Identity proof of sole proprietorship

• Duplicate of bank statement of the term loan

Process to apply

Applying for a business loan can be done in person at a bank or online through the bank’s website.

Here is how to apply offline

• Go to the branch of the bank or NBFC of your choice. 

• Ask for the business loan application. Bank clerks will provide you with the application

• Fill out the application form. Make sure you ask for help in case you have any doubt regarding a particular formality

• Attest the form and submit it along with all the required documents.

• The lender will authenticate the form and the documents that you provide. 

• If the bank determines you are eligible, the loan will be credited to your account.

Here is the guide to applying for a business loan online

• Check out the website of your preferred lender.

• Click on the loan tab and select small business loan or business loan

• From the link, download the application.

• Fill out the application form. You can talk to customer service in case you have any doubt

• Upload the application form

• When contacted by customer service, provide all the documents

• If your application is accepted, the loan will be sent to your bank account within a few days.

So, this was a complete guide on how to get a business loan in Bangalore. Now you are ready to apply for a business loan and start your own business.

To know more details on SME loans in Banglore . You can email [email protected] or call at  +918886666821.