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Business loans

Finance shaped to the way the business actually runs.

Borrowing a lump sum to cover a working-capital gap is the most common — and most expensive — MSME mistake. Match the instrument to the cash-flow problem first.

The five products Which one fits? Eligibility & documents Government schemes FAQs
Choose a product

Five instruments, five different jobs.

Term Loan

One-time need · fixed schedule

A lump sum on a fixed repayment schedule. CGTMSE can make it collateral-free for eligible MSMEs.

See details

Working Capital

Recurring gap · revolving limit

A limit that breathes with the operating cycle. You pay interest on what you draw, not on what you were sanctioned.

See details

Machinery Loan

Equipment purchase · asset-backed

The machine secures the loan. Upgrading technology? CLCSS may carry an upfront capital subsidy.

See details

Business LAP

High ticket · lowest business rates

Pledge residential or commercial property. Interest may qualify as a business expense under Section 37(1).

See details

Line of Credit

Unpredictable timing · draw as needed

Draw only what you use, repay, draw again. Closely related to an overdraft, priced by usage.

See details

Not sure which?

Talk it through

Describe the cash-flow problem rather than the product, and an advisor will name the right instrument.

Check your eligibility
Match the instrument to the problem

Start with the cash-flow shape, not the product name.

Nearly every mis-sold business loan comes from getting this one mapping wrong.

The need is one-time and known

A new unit, an acquisition, a fit-out, a single large order. The amount is knowable up front and the payback is over years.

  • Term Loan — fixed EMI, fixed end date.
  • Machinery Loan — if the money buys a specific asset.
  • Business LAP — if the ticket is large and you hold property.

The need is recurring and variable

Receivables land 60 days after payables. Inventory builds before a season. The gap reopens every cycle.

  • Working Capital — a limit sized to the operating cycle.
  • Line of Credit — when even the timing is unpredictable.
  • A term loan here means paying interest on idle money for years.
What lenders underwrite on

Business lending reads the business, not just the borrower.

2–3 yrs Typical minimum business vintage for a formal facility
₹40L+ Annual turnover most lenders want to see, though NBFCs go lower
1.25× Debt service coverage ratio lenders commonly look for
₹5 Cr CGTMSE guarantee ceiling for eligible collateral-free MSME credit

Indicative figures, sourced from public lender and scheme information as of July 2026. Thresholds vary by lender, sector and scheme, and change without notice.

Eligibility & documents

What to have ready before you apply.

Most business loan rejections are paperwork failures, not credit failures.

Identity & constitution

  • PAN and Aadhaar of proprietors, partners or directors.
  • Partnership deed, MOA/AOA or LLP agreement as applicable.
  • Udyam registration, GST registration and shop licence.

Financials

  • 2–3 years of ITRs with computation of income.
  • Audited balance sheet and P&L for the same period.
  • 12 months of current-account statements.
  • GST returns for the last 12 months.

The specific ask

  • Machinery: proforma invoice from the supplier.
  • Working capital: debtor and creditor ageing, stock statement.
  • LAP: title deed, approved plan, latest tax receipt.
  • Any existing sanction letters and repayment track record.
Government schemes

Money you may not have to secure — or fully pay for.

Eligibility is narrow and scheme rules change. Worth checking before you pledge property.

CGTMSE

A credit guarantee that lets eligible MSMEs borrow without collateral, because the trust covers the lender's risk instead of your property. Guarantee fees apply and are charged to the borrower.

CLCSS

A capital subsidy on eligible plant and machinery for technology upgrades in listed sectors. Applied upfront against the machinery cost, which reduces what you need to borrow.

PMMY (Mudra)

Collateral-free credit for micro enterprises across Shishu, Kishore and Tarun tiers. Useful at the smaller end where a formal facility would otherwise be out of reach.

Scheme descriptions are summaries of publicly published rules as of July 2026 and are not eligibility advice. Final eligibility is determined by the lender and the administering agency.

Business loan FAQs

The questions that come up first.

Term loan or working capital — how do I choose?

Ask whether the need repeats. A one-time, knowable spend with a multi-year payback is a term loan. A gap that reopens every operating cycle is working capital. Funding a recurring gap with a term loan means paying interest on money sitting idle; funding a capital purchase from a working-capital limit starves the business the following season.

Can I get a business loan without collateral?

Yes, in two ways. Unsecured business loans exist but price the risk into the rate and cap the ticket size. Alternatively, CGTMSE-backed credit can be genuinely collateral-free for eligible MSMEs — the guarantee substitutes for security. A guarantee fee applies.

How long has my business needed to exist?

Most banks want two to three years of vintage with filed financials. Some NBFCs and digital-first lenders will look at 12 months with strong GST and banking data. Below that, Mudra or a facility against personal security is usually the realistic route.

Is the interest tax-deductible?

Interest on borrowing used for business purposes is generally allowable as a business expense under Section 37(1) of the Income Tax Act, while the principal repayment is not. This is general information, not tax advice — confirm treatment with your CA for your specific case.

Does my personal credit score matter for a business loan?

Yes, substantially — especially for proprietorships and small partnerships, where lenders read the promoter's bureau report alongside the business's own credit conduct. A weak personal score can sink an otherwise healthy business file.

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