Small Business Lending

Learn all about eligibility, financing, and tips for successful applications.
Small Business Lending
3 min
04-July-2024

What is small business?

A small business is a privately-owned enterprise typically operated by a small number of individuals. It is characterised by its relatively modest size in terms of revenue, number of employees, and scale of operations. Small businesses play a vital role in the economy, often serving local communities and contributing to job creation and economic growth. They can operate in various sectors, including retail, services, manufacturing, and technology. Small business owners are responsible for managing day-to-day operations, making strategic decisions, and overseeing financial matters. While they may face challenges such as limited resources and competition, small businesses also offer flexibility, innovation, and the opportunity for entrepreneurship and independence.

What is small business lending?

Small business lending refers to the provision of financial support to small enterprises by banks, financial institutions, or alternative lenders. These loans are tailored to meet the unique needs of small businesses, offering funds for various purposes like expansion, equipment purchase, inventory management, or working capital.

Business loans can provide essential capital to cover operational expenses, invest in growth opportunities, or manage cash flow fluctuations. With flexible repayment terms, competitive interest rates, and quick disbursal, business loans empower small business owners to seize growth opportunities, overcome financial challenges, and achieve their entrepreneurial aspirations. Whether it's to launch a new venture, expand an existing one, or navigate through tough times, small business lending plays a vital role in fuelling economic growth and fostering entrepreneurship.

Types of small business loans in India

Small businesses in India have access to various types of loans to support their financial needs:

  1. Term loans: Offered for a specific term with fixed or variable interest rates, used for various purposes like expansion or equipment purchase.
  2. Working capital loans: Provide funds to cover daily operations like inventory purchase and payroll.
  3. Equipment financing: Specifically for purchasing machinery or equipment, often with the equipment itself serving as collateral.
  4. Business line of credit: Offers flexible access to funds up to a predetermined limit, useful for managing cash flow fluctuations.
  5. Invoice financing: Advances funds against outstanding invoices, helping to bridge cash flow gaps while awaiting payment from customers.

These loan types cater to different business requirements, providing financial flexibility and support for growth and stability, which are essential for implementing small business ideas.

How do small business loan works?

Small business loans provide financial support to entrepreneurs for various purposes, such as starting a new venture, expanding operations, or covering day-to-day expenses. Here's how they work:

  1. Application: The business owner applies for a loan from a bank or financial institution.
  2. Assessment: The lender evaluates the business's creditworthiness, financial history, and ability to repay the loan.
  3. Approval: If approved, the loan terms, including interest rate and repayment schedule, are determined.
  4. Funding: Once accepted, the funds are disbursed to the business owner's account.
  5. Repayment: The borrower repays the loan in instalments over a specified period, including interest.
  6. Use: The business utilises the funds for its intended purpose, such as purchasing equipment, hiring employees, or expanding operations.
  7. Benefits: Small business loans provide access to capital, enabling businesses to grow and thrive, contributing to economic development and job creation.

Eligibility criteria for our business loan

Anyone can apply for our business loan if they meet the five basic criteria mentioned below. If you meet all the business loan eligibility criteria, you will need a set of documents to complete your application process.

Eligibility criteria

  • Nationality: Indian
  • Business vintage: At least 3 years
  • CIBIL Score: 685 or higher
  • Work status: Self-employed
  • Age: 24 years to 80 years*

Documents required

  • KYC documents - Aadhaar/ passport/ voter’s ID/ driving license/ letter from NPR/ NREGA job card
  • PAN card
  • Proof of business ownership
  • Other financial documents

*Higher age limit is applicable at the time of loan maturity.

How to apply for our business loan

To apply for Bajaj Finserv Business loan, simply following these steps:

  1. Click on the ‘APPLY' button on this page.
  2. Enter your 10-digit mobile number and OTP.
  3. Fill in the application form with your basic details, such as your full name, PAN, date of birth, and PIN code.
  4. Once you enter all your details, please click on ‘PROCEED’ to visit the loan selection page.
  5. Enter the loan amount that you need. Choose from our three business loan variants – Term, Flexi Term, and Flexi Hybrid. 
  6. Choose the repayment tenure – you can select tenure options of 12 months to 96 months and click on ‘PROCEED’. 
  7. Complete your KYC and submit your business loan application.

Our representative will guide you on the next steps. The loan amount will be transferred to your bank account upon verification of your documents.

Things to consider before applying for a small business loan

Before applying for a small business loan, consider the following:

  1. Assess your needs: Determine the purpose of the loan and the amount required.
  2. Check eligibility criteria: Ensure you meet the lender's requirements regarding credit score, revenue, and business age.
  3. Research lenders: Compare interest rates, fees, and repayment terms from different lenders.
  4. Understand loan terms: Read the fine print to comprehend interest rates, repayment schedules, and any hidden costs.
  5. Evaluate risk: Consider the impact of taking on debt on your business's cash flow and profitability.
  6. Prepare documentation: Gather financial statements, tax returns, and business plans required for the loan application.
  7. Explore alternatives: Assess alternative funding options like grants, crowdfunding, or personal savings before committing to a loan.

Careful consideration of these factors helps ensure that a small business loan meets your needs and contributes positively to your business's growth.

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-approved limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

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Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

What is the meaning of small business lending?

Small business lending refers to the provision of funds by financial institutions to small businesses for various purposes like expansion, working capital, or equipment purchase. These loans are tailored to the needs of small enterprises, helping them grow and thrive in the competitive market landscape.

How can I get a loan for a small business?

To check the eligibility to get a business loan, simply visit our Business Loan page.