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What is a Commercial loan for a small business?

What is a Commercial loan for a small business

What Exactly is a Commercial Loan?

The fund issued to a business by a bank or lending institution is called a commercial loan. This fund is used to manage financial expenditures or operational costs, which the entrepreneur could not be able to manage.

Why does one need a Commercial loan?

Expansion

Small businesses that are well known in the market can now transfer to the next level, which is called the expansion of business. With a well-established business image and good transactional record in the place, one can use a commercial loan to enlarge the business. Small business holders can also expand their business in different geographical locations and target new audiences.

Equipment and tools

Technology is changing day by day. With the help of new technologies and tools, you can increase the production and quality of your business. Small business people can get benefits of commercial loans to buy the latest equipment, which provides them competitive benefits.

Inventory management

Due to a shortage of funds, small business people could not take big orders. For big orders, one must have enough raw materials so that they can fulfill the orders. In this situation, commercial loans can help small business owners, and small business people can take advantage of commercial loans to purchase much inventory in advance.

Increase working capital

Healthy working capital plays an important part in the success of any business, such as micro, small, medium, or large. Now to carry on healthy business to have healthy working capital. The consumer’s delay in payment can be avoided if the commercial loan is taken to balance out the adverse financial implications.

Consolidate Debts

Small business people can merge all their smaller loans into one installment, and it will decrease the stress of your monthly budget, and at the same time, you can track your debts. You can also extend your repayment period for up to 1 year, which means you can shrink high EMI amounts.

Also Read: How To Apply For An E-commerce Business Loan in India

What is a Commercial loan

How do I Know If I am Eligible for a Commercial Loans

If one can accomplish all requirements which are given below, one can apply for a commercial loan, Eligibility Criteria for Commercial Loans are here:

  • Business should be in functioning for more than 6 months
  • Min turnover of INR 90,000 or more must be accomplished 3 months ahead of time submitting your loan application
  • Business must not be on the list of bad locations
  • NGOs and Charitable institutions are not eligible for commercial loans

Commercial loan requirements while applying for a commercial loan

  • Bank statement of previous 1 year
  • Business registration proof
  • Owner’s PAN card copy
  • Pre-close proprietor’s Aadhaar card copy
  • Copy of partnership deed
  • Company PAN card copy
FAQ-Frequently-Asked-Questions

FAQs:

1. What are the maximum loan funds I can get?

Ans: You can get 50,000 to 2 crore.

2. How long is a commercial loan?

Ans: Commercial loans mostly range from 5 years to 20 years.

3. What are the 4 types of loans?

Ans: Below are four types of loan:

  1. Personal loan
  2. Home loan
  3. Business loan
  4. Gold loan

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