A commercial loan is financial assistance provided by the financial lenders [Banks or Non-Banking Finance Companies (NBFCs)] to the companies which are needed to operate its business as well as take care of its business expansion plans. Commercial loans are secured business loans that are available against a collateral/security while unsecured business loans that are business loan without collateral. Commercial loans are usually available at an affordable commercial loan interest rate.
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Eligibility to Apply for a Commercial Loan
Few of the mandatory eligibility to apply for commercial loans have been detailed as follows:
The applicant of the company should be at least 21 years of age and 65 years at the time of loan maturity.
The company should be in business for a minimum of 5 years and it should be a profitable business.
For new companies, a well-detailed, well-documented business plan has to be presented.
Who is eligible to apply for a commercial loan?
Basically, all entities such as a private limited company, public limited company, partnership firm, limited liability partnership company, proprietorship company, start-up companies, micro small and medium enterprises (MSMEs), etc can apply for a commercial loan.
What are the documents required for business loans?
The documents required for a business loan are very basic such as identity proof, address proof, a business registration copy, rent agreement copy, ITR copy, Passport sized photographs, etc.
What are the factors upon which Commercial loan interest rate is dependent?
Commercial loan interest rate is based on various factors of which a few have been stated as follows:
The commercial loan interest rate is generally lower on secured business loans as compared to unsecured business loans owing to the risk being involved owing to no collateral.
The commercial loan interest rate may vary depending upon the financial lender being opted by the company for the commercial loan.
Based on the collateral offered to the financial lender, the commercial loan interest rate may vary.
The turnover of the company may help in obtaining an affordable commercial loan interest rate from the financial lender.
If the company is operating a profitable business, it may get a customized commercial loan interest rate.
A company with stabilized Cash flow may get an upper hand in negotiating the commercial loan interest rate.
Commercial loan interest rate also varies depending upon the financial lenders offering Unsecured business loans/Secured business loans against fixed Commercial loan interest rate or floating Commercial loan interest rate. In the case of fixed Commercial loan interest rate, the company must pay the same interest rate throughout the tenure of the Commercial loan whereas in the case of floating Commercial loan interest rate, it varies, and it depends more on the market fluctuations.
To summarize, a company having a profitable business can easily get a commercial loan at an affordable commercial loan interest rate from a financial lender by providing basic documents.
Solving Real problems
I have been running my business for over twelve years but have not been able to undertake expansion activities. I applied to Ziploan and they cleared my loan application in a very short span of time.
I approached Ziploan for an equipment finance loan. Their eligibility criterion was easy to fulfill because it required only 2 years ITR and 10 lacs of annual banking credit.
I always thought that loans and credit facilities were only available to large businesses with significant turnover. I never thought I would be eligible to qualify for a business loan too. Ziploan is boon for small enterprises like me.
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