Availing a business loan is a strategic move for entrepreneurs looking to inject funds into their business ventures. Whether it is for purchasing inventory, scaling operations, or managing cash flow, a business loan serves as a catalyst for sustainability and growth.
However, before applying for a new business loan, you must take into account various parameters. These involve your eligibility, interest rates offered, the minimum and maximum loan limit, repayment tenure, and fees associated with your business loan. These factors play an essential role in helping you make a sound decision as per your business’s financial position and commitments.
Focusing on the borrowing limit is crucial because it determines how much capital you can avail to meet your business requirements without overexposing your business to debt. This also helps in strategic financial planning by allowing you to better align your loan with business growth opportunities.
What are the minimum and maximum borrowing limits offered on a business loan?
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The borrowing limit for quick small business loans differs considerably from lender to lender. IndusInd Bank in this regard stands out as it offers business loans that range between a minimum of Rs 2 lakh and a maximum of Rs 20 lakh. This range is especially advantageous for businesses looking to apply for quick business loans online, offering them an edge due to high borrowing limits without the need for pledging any security or collateral. Other crucial benefits include:
- Easy to meet eligibility criteria
- Customisable loan tenure ranging from 12 to 36 months
- Quick processing
- Instant fund disbursal
- Ease of doorstep banking
Such features make the option to apply for a business loan attractive for entrepreneurs wanting to get a business loan online.
Banks vs Fintech – Major distinctions you must know
Banks distinguish themselves in the space of business financing by providing a wide spectrum of loan proceeds, ranging from a modest sum best matched for small-scale business needs to massive capital for substantial expansions, without the need for pledging any security.
On the other hand, Fintech companies offer quick application processes, but often fail to match banks in offering tailored and holistic solutions, particularly in aspects concerning loan conditions and borrowing expenses. Other important distinctions include:
| Rate of interest | Generally, banks provide a lower rate of interest due to their accessibility to massive deposits and stringent regulatory framework, which assist in lowering risks. Often, fintechs witness higher operational risks owing to the provision of unsecured loan features and innovative lending models, which propels them to charge higher interest rates on business loans. |
| Eligibility | Banks have simplified their eligibility parameters to stay competitive. They now combine the reliability of conventional institutions with features such as accessibility and convenience, which were previously just offered by fintech. |
To sum up
Applying for a business loan is a vital move for entrepreneurs seeking to enhance their business ventures. However, before applying make sure to factor in the Business Loan eligibility criteria, borrowing limits, interest rates, and repayment terms as they impact affordability and the potential to achieve business goals.
Reviewing the minimum and maximum loan limits offered by a business loan is recommended to ensure that the loan proceeds are in line with the monetary needs and growth prospects of the business.
In the choice between banks and fintech for business funding, banks tend to offer a more prudent solution. While fintech offers quick processing and convenient approaches, banks deliver a more holistic financial solution, including tailored services and a lower rate of interest. This makes them suitable for businesses wanting to expand as well as maintain high efficiency.