What is a Business Loan? Meaning, Types & Benefits

Types of Business Loans

Depending what’s required for your business, there’s a range of business loan options today that provides flexibility in how you manage your funding.

For buying equipment of building new infrastructure, Term Loans offer a fixed sum for a set period. On the similar lines in Equipment Financing loan that supports the purchase or lease machinery and technology essential for running the business.

For managing everyday expenses like employee salaries, rent, vendor payments, Working Capital Loans are beneficial, especially for ventures looking for small business loans. A Line of Credit gives access to funds up to a set limit. It lets you borrow as needed and pay interest only on what you use.

With India’s booming startup culture, Startup Business Loans meet the costs of setting up and running new ventures. There are small business loans for early-stage ventures.

For your venture’s pending customer payments, Invoice Financing can unlock that money, easing your cash flow.

Features and Benefits of Business Loans

Business loans come with multiple features. You can use the funds for anything business-related...rent, salaries, expansion, or marketing. There are flexible tenures; ranging from a few months to several years, depending on the lender and loan type. Many lenders offer collateral-free loans, especially for smaller amounts. Competitive business loan interest rates available depending on credit history, business performance, and loan type. And the best part: swift approval and disbursal, especially through digital lending platforms and apps like Kissht.

To plan your repayments better, use a business loan EMI calculator available on most lender websites. It will help you estimate your monthly instalments based on loan amount, tenure, and rate.

Business Loan Eligibility

Eligibility may differ across lenders; however, the general criteria often include the applicant being an Indian citizen aged between 21 and 65; a business vintage of at least 1–2 years; a minimum annual turnover as per lender’s requirement; a healthy credit score, ideally above 700; and valid business registration documents, bank statements, and financial records.

Platforms and lenders also consider repayment capacity, business type, and existing obligations before approving the loan. Some even allow you to check business loan eligibility online by filling out a quick form or using pre-approved loan offers.

How to Apply for a Business Loan

With digital advancements in place, the application process has become a lot simpler. All you need to do is visit the lender’s website or download a business loan app and then fill in business and personal details. Upload necessary documents (KYC, income proofs, registration papers, bank statements). Use the business loan EMI calculator to review repayment feasibility, and finally submit the application.

Once submitted, the lender evaluates your application, and if eligible, the loan is disbursed often within 48 to 72 hours. These days, many opt to apply for business loan online due to its speed and convenience.

Factors That Influence Business Loan Interest Rate

The business loan interest rate is usually determined by credit history and repayment record, business turnover and profits, nature of the industry, loan amount and tenure, and whether the loan is secured or unsecured.

Before finalising, don’t forget to review multiple offers and understand the total cost of borrowing.

Choosing the Right Lending Platform

Digital platforms are effective for offering a quick, paperless journey as they connect borrowers with multiple lenders, and also allow comparisons across rates, terms, and offers. Take Kissht, for example. It provides business loans through a simple digital process. You can check eligibility, upload documents, and track loan approval, all from a smartphone.

While digital channels are convenient, it’s always a good idea to evaluate terms carefully and ensure transparency in fees and repayment conditions.

FAQs

What is a business loan?

A business loan is a borrowed sum from a bank, NBFC, or digital lender that helps fund different business needs, like managing expenses, buying equipment, or expanding operations. It’s repaid over a fixed period through monthly installments and can be secured or unsecured.

How can a business loan benefit my company?

Business loans offer quick access to capital for running or growing your business. Funds can be used for operations, marketing, hiring, or expansion. Many lenders offer flexible terms, competitive rates, and even collateral-free options for smaller amounts.

Who is eligible for a business loan in India?

Eligibility varies, but commonly includes Indian citizens aged 21–65, a minimum business vintage of 1–2 years, acceptable annual turnover, a good credit score (ideally 700+), and valid business documents like registration papers, bank statements, and financial records.

Why choose a digital platform like Kissht for a business loan?

Digital platforms make the process faster and more convenient. You can check eligibility, upload documents, compare offers, and track approvals, all from your phone. Kissht, for instance, simplifies the loan journey with a fully online process and fast disbursal.