Table of Contents
- What is a 5 lakh business loan?
- Features of a business loan of 5 lakh
- Banks offering 5 lakh business loan
- Business loan documents
- 5 lakh business loan interest rates
- EMI on 5 lakh business loan
- EMI calculator for 5 lakh business loan
- How to get a 5 lakh loan for business?
- 5 lakh business loan by government
- Business loan of 5 lakh eligibility
Need a small business loan of ₹5 lakhs but don’t have collateral for it? Fortunately, when it comes to short term loans for SMEs, there are several banks and NBFCs offering ₹5lakh business loan without collateral. Apart from the Paytm business loan up to ₹5 lakhs, there are numerous other lenders from whom you can borrow the sum instantly, with minimum documentation and low interest rates. So, if you need ₹5 lakhs urgently for your startup or any other business venture, learn how to avail business loan of 5 lakh in India.
Also, never forget the numerous government loan schemes available in the market, that allow borrowers to avail funds as per their business requirements. Let’s look at some of the frequently asked questions (FAQs) on 5 lakh business loan in India.
What is a 5 lakh business loan?
Running a business requires funds. And banks and NBFCs offer business loans for the same. While there are long term business loans offered for bigger projects and purchases, there are small business loans offered to meet immediate business needs such as working capital, paying rent, purchasing raw material, meeting emergency expenses etc.
A Business loan of 5 lakh is a collateral free business loan available with minimum documentation. Due to its small amount, it is usually easily available and comes with low business loan interest rates. The application process and loan disbursal are usually quick.
What are the key features of a business loan of ₹5 lakh?
Some of the main features of a ₹5lakh small business loan are:
- Easily available at leading banks and NBFCs
- Usually collateral-free, i.e., these are unsecured business loans and can be availed without offering any collateral as security
- Easy application process with minimum documentation, i.e., loan application is usually done online with minimum paperwork from the comfort of your home/office
- Eligibility for application usually based on credit and CIBIL score and business financials
- Quick disbursal, i.e., the loan once sanctioned is usually disbursed within 2-5 days to the applicant’s account
- Flexible, easy EMI for loan repayment, i.e., for a ₹5 lakh loan, interest-rate at 14% p.a., for 36 months, EMI is ₹17,088 p.m. only
Which banks/NBFCs offer ₹5 lakh small business loan?
Most banks offer small business loans to new businesses and startups for their venture. Take note, that the Simplified Small Business Loan scheme by SBI offers loans from ₹10-₹25 lakhs.
Other banks/NBFCs that offer 5 lakh loan to businesses are:
|Bank name||Loan amount||Interest rate||Loan type|
|IIFL Finance business loans||Up to ₹30 lakhs||12.75%-33.75 p.a.||No collateral loan|
|HDFC Bank business loan||Up to ₹50 lakhs (₹75 lakhs in certain location)||10%-22.5% p.a.||Collateral-free|
|Axis Bank business loan||₹50,000 – ₹75 lakhs||11%-25% p.a.||Generic business loans
EMI based, collateral free
|IDFC First Bank unsecured business loan||Up to ₹1 crore for self-employed and businesses (up to ₹50 lakhs on current account statement and GST returns)||10.5%-24%% p.a.||Collateral-free
(Also check other types –working capital loan, micro business loan)
|IndusInd Bank business loan||Up to ₹50 lakhs||13%-22% p.a.||Business loans without collateral|
*All readers/borrowers are advised to check with the lenders for exact loan amount, interest rates, and other details.
What are the documents required for a ₹5 lakh business loan?
If you need funds urgently for your business, getting a small amount loan is advisable as it will require less documentation. For a five lakh rupee business loan in India, some of the documents requested by lenders are:
- Identity proof – Voter card, PAN card, Aadhaar card, Passport, etc.
- Ownership proof (Business and Residence address proof) – Telephone/electricity/water bill, municipal tax bill, GST registration certificate, lease agreement, sales tax certificate (any one)
- Business proof – Udyam certificate, GST certificate, Shop & Establishment certificate, Trade licence, CA audited turnover certificate, business incorporation certificate, VAT/Sales Tax certificate (any one)
- Income proof – Last 2 years ITR, GST returns, 6 months bank statement, 6 months balance sheet and P/L statement, etc.
What is the ₹5 lakh business loan interest rate?
In the previous section we have looked at different banks and NBFCs offering small business loans. While these loans are available for a higher value, i.e., usually up to ₹75 lakhs, as a sole proprietor/entrepreneur/startup owner, you can approach for unsecured business loans for ₹5lakh.
In general, the interest rate on ₹5 lakh loan for startup business is less as the amount of loan is small, and ranges between 10% – 25% p.a. based on financial records, business credit report, and other basic documentation. Note, there are other charges and fees included.
- ₹5 lakh business loan interest rate – 10% – 25% p.a. (approx..)
- Processing fees – Up to 3.5% of the loan amount
- Documentation charges – ₹2,000 – ₹3,000 approx. (lender specific)
- Business loan foreclosure charges – Usually applicable on full prepayment and part-prepayment (lender specific)
- Stamp duty – Applicable as per state laws and government regulations
What is the EMI on 5 lakh business loan?
Most business loans today are offered with EMI payment option, i.e., you get to repay the loan by paying a specific amount back to the lender every month. Using an EMI calculator for business loan of 5 lakh, your equated monthly instalments (EMI) stand at:
- Loan amount – ₹5 lakh
- Loan period – 2 years (24 months)
- Loan interest rate – 14% p.a.
- EMI payment – ₹24,006
How to use a ₹5 lakh business loan EMI calculator?
You can check for an EMI calculator online to check the EMI you have to pay on 5 lakh rupees business loan. If you want to use a ₹5 lakh business loan EMI calculator, visit Business Loans through Tata nexarc and use our online calculator to know the exact EMI you have to repay. Visit: https://www.tatanexarc.com/finance/business-loans/
Steps to use online Business Loan EMI calculator on Tata nexarc:
- Enter loan amount – ₹5 lakh (you can either type or use the bar to enter the amount)
- Enter the loan tenure in months – 24 months (type or use the bar)
- Enter the interest rate applicable – 15% p.a. (type or use the bar)
- Click anywhere outside the box
- View the EMI displayed – EMI will be ₹24,243
- To learn more or to apply for a ₹5 lakh business loan, click on ‘Apply’
How to get a ₹5 lakh loan for business?
You can get a business loan of ₹5 lakh from leading banks and NBFCs in India. Most provide the option of online and offline business loans. However, if you want to avail the loan quickly, it’s advisable to apply for 5 lakh business loan online, as documentation, verification, loan processing and other requirements will be carried out faster.
Here’s a quick summary on how to get a five lakh rupee loan for business.
- Visit the bank’s nearest branch and get a loan application form OR apply online on the bank’s website OR apply for a collateral-free business loan through Tata nexarc
- For offline – Fill in the form, share the documents requested, and submit your loan application for processing
- For online – Fill in the form, upload the requested documents, and submit your application
- Wait for the verification of documents to be complete after which the bank will get back to you on the status of your application (Note – offline verification can take up to 5-7 days, while online document verification usually takes 1-3 days)
- If your loan application is approved, you will receive the confirmation and sanction letter, with further instructions
- If your loan application is rejected, you will receive communications on the reasons for business loan rejection
- The loan is usually directly disbursed to your account and now you can use it as per the purpose you have cited in your application
Note: Business loan rejection can affect your credit score. Learn more about the impact of loan rejection on CIBIL score.
What are the ₹5 lakh loan for business by government?
The Government of India has started several loan schemes for startups and small businesses to avail finances for their business.
Pradhan Mantri MUDRA Yojana is the most popular scheme and offers loans up to ₹10 lakhs to micro and small businesses. Under the ‘Kishor’ category, businesses can borrow loans up to ₹5 lakhs to meet working capital needs or expand their business.
What are the eligibility requirements for business loan of ₹5 lakh?
Whether you are applying for a startup business loan of 5 lakh or any other small business loan, some of the basic eligibility requirements are:
- Age – Usually 18 – 65 years at the time of loan maturity
- Business type – Any (e.g., LLP, sole proprietorship, OPC, partnership firms, etc.)
- Business vintage – 2+ years
- Sector – Any (other than restricted sectors)
- Minimum income/turnover – Lender specific (e.g., minimum ₹10 lakh per annum)
- Credit score – 650+
In general, lenders offer different types of business loans based on requirements. There are lenders that offer startup business loans, ₹25 lakh business loans, loans for working capital, loans for raw material purchase, business line of credit etc.
As a borrower, what you need is to understand your needs, and avail a funding option that works best for you.
This article is for information only. All readers are advised to check with the bank/NBFC on the latest details before availing a loan.