Overview

Telangana lies in the Deccan Plateau, comprising an area of 114,800 sq. km, with Krishna and Godavari being the two important rivers of the state. Nagarjuna Sagar Dam is the world’s highest masonry dam atop the Krishna River. The state ranks second with an increasing forest area of around 21,214 sq km.

Telangana provides opportunities for those with creativity and entrepreneurial minds. However, the influx of new businesses has increased the demand for funding. Many options are available to you if you’re looking for a Telangana business loan to help raise the money you need. Here we provide you with top banks that can help you to kickstart your business and make it big in Trilinga Desa.

The youngest Indian state has never aimed small; since its formation in 2014, Telangana has been a pioneer in the Nation’s growth. Since 2016, the state has been among the top 3 states for “Ease of Doing Business” and attracted an investment of 21 bn USD since 2014. The state’s GDP growth rate was 14.2% from 2015-19, compared to India’s GDP growth rate of 6.9%.

Telangana lies in the Deccan Plateau, comprising an area of 114,800 sq. km, with Krishna and Godavari being the two important rivers of the state. Nagarjuna Sagar Dam is the world’s highest masonry dam atop the Krishna River. The state ranks second with an increasing forest area of around 21,214 sq km. 

Telangana is the leading producer of Rice, Tobacco, Mango, Cotton, Sugarcane, and other horticulture crops. Therefore agro-based industry and FMCG are booming sectors of the economy. The government also encourages e-market activities by networking all agriculture mandis. 

Telangana got vast deposits of natural resources, rich in limestone, the primary raw material in cement manufacturing; Telangana is home to cement manufacturing plants. 

India is the world’s largest Mica producer, and Telangana holds massive Mica deposits. Telangana is the only state in the Deccan Plateau with such vast coal deposits. In addition, iron Ore, Uranium, Manganese, Gneissic Granite and Dolerite are other natural resources. Therefore mineral-based industries are on the rise. 

The most liveable city Hyderabad for the 5th consecutive year by Mercer, is the state’s capital. With Hyderabad contributing the second highest exporter in IT exports, Telangana ranked 10 in Export Preparedness and National Logistics Indexes 2021. 

Home to the world’s largest film studio complex, The Ramoji Film City. Hyderabad, the hub of life sciences, biotech, pharma and tech-based industries, is anticipated to increase its revenue from $13 billion to $100 billion by 2030. Hyderabad was awarded 3 ‘Smart Cities India’ awards from the ‘India Trade Promotion Organization’ for a green and clean city, for smart trash management and startups at the 28th Convergence India 2021 International Exhibition and 6th Smart Cities India Expo,

Warangal, Karimnagar, Nizamabad, and Khammam are some additional significant urban areas from business and industrial points of view.

The newest state in India, Telangana, is renowned for its distinctive culture, dialect, and cuisines. It has a welcoming community, diversified society, and amalgamation of cultures. The Public Sector, Tourism, Defense Industry, IT Services, Film Industry, and Culture & Heritage are a few industries that rely on Telangana for its offerings. The public sector industry is highly represented in Telangana, with nearly a third of its population employed in the field.

The Telangana Defense Industry is one of the country’s most advanced and productive manufacturing hubs, producing arms technology for India’s domestic defence market and other parts of the world.

Why do you need a business loan?

A business loan can be a handy tool for any entrepreneur. It is a substantial investment that can help any entrepreneur to grow their business and reach new heights.

A business loan provides :

• Capital to maintain cash flow
• Credits to acquire more commercial essentials. 
• Use for any expense, such as buying equipment or inventory, paying debts, or hiring employees.

You can use the funds from business loans to get your business up and running, which will, in turn, help you establish your credit and build your reputation as an established company.

A business loan can help you start up your own company, or it can also help you expand existing one. Moreover, it is an excellent way to get financing for your company without selling any of its equity.

Following are the benefits of acquiring a business loan: 

• It can help you start up or expand your business without having to sell equity.
• Loans with extended payback periods give the borrower more time to repay the loan than other financing methods.
• By contacting a lender and requesting a loan, you gain more flexibility with how much money you want to borrow and when you want it. 

Reasons

The dynamic state of Telangana has:

• 128.3% increased GSDP rate between 2017-2023, the 5th highest growth in the Nation.
• The highest no.of SEZs in India i.e. 63
• An investment of $21 bn USD since the formation
• 2nd highest in sustainable energy production with 3621 MW Solar Capacity.

To grant single window clearance to mega projects within 15 days and other projects in 30 days, Passed in 2014, the Telangana State Industrial Project Approval and Self-certification System (TS-iPASS) Act is the quickest in India.

To boost the entrepreneurship culture in the state, the Telangana government has taken some steps to make it easier for entrepreneurs to get business loans. 

They have taken a few measures, such as: 

• Setting up a single window clearance system, 
• Introducing an online application process, and 
• Simplification of rules for collateral security. 

The focus sectors for acquiring a business loan in Telangana are

Pharma Sector

With 19 MedTech incubators in Hyderabad, Telangana manufactures over 1/3 of the global vaccines; around 30% of India’s pharma production comprises 40% of total drug production and 50% of drug exports. The state has attracted 1.49 bn USD in the life sciences sector with a vision of attracting an investment of 100 bn USD by 2030. 

IT and Tech-based Industries

Telangana is home to 1500 IT/ITeS companies that employ around 5.8 lakh direct and around 7 lakh indirect employees. In addition, around 150 VFX companies employ 30,000 professionals and are the first Indian state to establish a Data Centre. 

Defence and Aerospace, Automobiles, Food Processing, Textile and Apparel, Electronics and EV, Mineral and wood-based, Plastics and Polymer, Gems and Jewellery, Green Technologies, FMCG, Logistics, Renewable Energy, MSME, Retail and Startups are some of the critical sectors growing sectors in the state being funded by global investors and companies all over the world.

Read More: How to get Business Loan in Punjab National Bank (PNB) Business Loan ?

Best business loans in Telangana

Given below are the different types of commercial loans available in the state of Telangana:

Working Capital Loan:

A working capital loan is obtained to finance a business’s daily requirements, such as paying employees’ paychecks, because not all businesses see consistent annual revenue; hence, they need working capital flow to maintain the workflow. This loan is not utilised to purchase long-term assets.

Term Loan:

These short-term loans have fixed interest rates and particular borrowing lengths of 84 months. These loans are given to established businesses to aid in capital expenditure expansion. These loans have flexible repayment terms and minimal documentation requirements.

Equipment Loan:

This loan is used to purchase tangible business equipment other than real estate. Both SMEs and MSMEs are eligible for an equipment loan. Credit amount, Repayment tenure, and the interest rate depend from Bank to Bank. 

Short-Term Loan:

This loan is taken out to meet a brief demand for funds from the borrower or their business. Given that it is a form of credit, it entails paying back the principal plus interest by a specified due date.

Micro Finance Scheme (MFS):

The Union Government has started a microfinance programme and partnered with the current SIDBI programme by paying for security deposits from MFIs and NGOs to obtain loans from SIDBI.

Small business owners and entrepreneurs in undeveloped regions of India can receive loans, credit, insurance, access to savings accounts, and money transfers through microfinance.

Top 10 Banks & NBFCs

The Government of Telangana and the financial institutions have taken specific initiatives to improve the ease of doing business and acquire credits to expand your business. These are the best institutions to look out for when applying for a commercial loan.

1. State bank of India

SBI is the largest Bank in India in terms of assets, number of branches and user base. They are very affordable and specifically designed to meet the needs of the Indian masses. In addition, the Bank offers SSBL (Simplified Small Business Loans) to early entrepreneurs engaged in secondary and tertiary sectors.

Key Highlights

• The sanctioned amount is between Rs. 10 lakh to Rs. 25 lakhs.
• They take a minimum of 40% as collateral security.
• The repayment tenure is upto 60 months.

2. Punjab National Bank

Established in 1894, PNB is India’s second-largest state-owned Bank in business volume and network size. The Bank provides credits to self-employed professionals, business owners, startups, and entrepreneurs. The interest rate broadly depends on the CIBIL score and candidates’ financial data. In addition, PNB provides business loans under various schemes like PNB Green Ride, Snjeevani, Vanita, Professional Schemes, Super Trade, and MUDRA.

Key Highlights

• The loan amount ranges from Rs. 50,000 to Rs.50 lakhs
• The interest rate ranges from 8.15% to 15%.
• They take Rs. 300 per lakh or part thereof as their processing charges
• The loan’s term is anywhere between 12 to 60 months.

3. Central Bank of India

CBI provides diversified loan options for MSMEs sectors, and big businesses, manufacturing and service sectors, are eligible for the credits. In addition, the banks provide commercial loans under various schemes, including Cent-Business Gold Loan, Construction Equipment Finance, a scheme for Contractors, Doctors, Mortgages, women entrepreneurs, food processing and educational institutions.

Key Highlights

• The maximum loan amount offered is Rs. 10,00,000.
• The loan term is between 12 to 60 months.
• Business Loans are offered at an interest rate of 8.55% to 12.80%. p.a.
• Processing fees are Rs. 0 to 50,000 or 0.5% of the loan amount.

4. HDFC Bank

The largest private sector bank in India provides collateral-free commercial loans for upto Rs. 50 lakhs. HDFC provides business loans in categories like Term loans, Working Capital Loans for contractors and traders, and Business loans for manufacturers and self-employed individuals. 

Key Highlights

• Loans are sanctioned at an interest rate ranging from 10.00% to 22.50%
• The credit offered is up to Rs.50 lakhs.
• Secured loans are available.
• The repayment tenure ranges from 12 to 48 months.

5. Canara Bank

The Bank offers a range of capital products, including loans for MSME sectors, working capital loans, term loans, export credits, infrastructure finance etc. The interest rate depends on the loan sanctioned, CIBIL score and type of business.

Key Highlights

• Loan amount ranges from Rs. 50,000 to 10,00,00,000
• The loan tenure is of a maximum of 7 years
• The interest rate is between 10.50% to 18%. p.a.
• Upto 1% of the loan amount is charged as processing fees.

Read More: How to Get Business Loan in IDBI Bank

6. Andhra Bank

The Bank saw a merger with the Union Bank of India in 2020. Andhra Bank provides flexible loans under schemes like PSB loans in 59 minutes, CGTMSE, Composite Loans, Doctor Plus and LUCC. The interest rate of the Union Bank loans will now apply to Andhra Bank. 

Key Highlights

• The Credit amount ranges from Rs. 50,000 to 10,00,000.
• The loan tenure is 12-60 months. 
• The interest rate is from 9.15% to 16%. p.a
• 1% to 3% of the loan amount is the processing charge.

7. Bandhan Bank

The Bank provides business loans to SME and MSME sectors. The Interest rate and the loan amount depend on the applicant’s profile submitted documents and the Bank’s policy. 

Key Highlights

• Interest Rate ranges between 15.50% – 20.00% p.a. 
• A 2-year business track record is required.
• The applicant should be aged between 23 to 65.
• Business Vintage, KYC documents are required.
• The processing fee is 2% + GST.

8. Indian Bank

The Indian Bank is a state-owned bank that began operating on 15th August 1907. Indian Bank offers a variety of credit plans tailored to the requirements of its individuals and organisations. Schemes for credit, advances, and loans are created especially for clients under schemes like IB My Own Shop, Micro, Doctor Plus, Contractor etc.

Key Highlights

• The highest credit offered is Rs. 25 crores.
• The loan’s term is anywhere between 12 to 120 months.
• The business loans come at an interest rate of 8.30% onwards
• 1% to 3% of the loan amount as the processing fee.

9. Dena Bank

The Bank offers various banking and financial products at affordable interest rates. It merged with the Bank of Baroda on 1st April 2019. The Bank sanctions business capital to MSMEs and other businesses. Business people, traders, and professionals can apply for business loans from banks to start a new business or grow an existing one under schemes which include Dena Shakti and Dena Laghu Udyami Credit Card.

Key Highlights

• Government-issued photo id and address proofs.
• ITR along with Form 16.
• Primary applicant should be a minimum of 18.
• The primary candidate should own a business
• The loan amount is upto Rs. 5 cr.
• The interest rate is between 8.85-16.40%
• The loan tenure is upto 10 years.

10. Bharatiya Mahila Bank

The Bank is a subsidiary of the state owned SBI. The Bank offers business loans and other financial services to women entrepreneurs across India to grow and enhance their businesses. The loans are offered under the CGTMSE scheme like BMB Shringaar, Annapurna Loan, SME Easy and BMB Parvarish.

Key Highlights

• The business loans are offered at the interest rate of 10.15% p.a to 13.65% p.a
• 7 years is the loan tenure.
• Processing fees as per bank rules.
• Collateral not required upto 1 cr. Credit.

Conditions for loan eligibility

Age limit	Typically 21-68 years of age
Employability	Self-employed
Annual Turnover	Minimum of 12 lakhs per annum
Business Vintage	Minimum 1-year
CIBIL Score	750 and above on the CIBIL Scale
Nationality	Indian
Eligibility	MSMEs, sole proprietorships, individuals, retailers, traders, and Pvt. Ltd.
Other	Ownership of a commercial or residential property

Documents required

The term ‘business loan’ describes a loan given to a business to finance a project or work capital. The application process could be lengthy and messy.

Depending on the institution, the documents required may vary. Still, they generally include

• Government-issued photo id proof like PAN Card, Driving License or Aadhar Card
• Residence Proof Documents (Voter ID, Utility Bills, Deed of A company)
• Personal financial details
• Statement of assets owned
• A list of liabilities
• Income Tax Return documents and proof of income.
• A projected balance sheet.
• Financial statements from the previous three years.

Process to apply

You firstly need to start the application process:

That’s where a bank or other lending institution will give you an answer on whether or not they’ll provide you with the money you need for your business. You may also need to provide documents that show your financial situation, such as your credit score, income history, and other personal details.

Next up is the approval process:

The lender will look into your application and decide whether or not they want to give you the money that you requested in the first place. They might request additional information before deciding if they feel it’s necessary. If you get approval for the loan, the lender will send a letter that officially states this to you.

Finally, you’ll have to repay your loan:

The amount of interest you’ll pay on top of your principal is up to the lender, and it may change from month to month or even from year to year.

FAQ’s