Business Loan Types - Beginner's Guide - Business Loan Blog - Tata Capital

A Beginner's Guide to Tata Capital Business Loans

Mar 06, 2017

Every business requires financial aid to fuel its growth and expansion. Availing of finance from external sources like banks and Non-Banking Financial Companies (NBFCs) provides the business with necessary funds.

Tata Capital, the financial arm of Tata Sons, offers business finance to those firms seeking capital. The borrowers have to then repay the loan amount along with the interest over a period of time, known as the loan tenure. This amount has to be repaid in regular installments, known as Equated Monthly Installments (EMIs). Tata Capital offers flexible repayment schemes where borrowers may repay the loan amount according to their businesses' cash flow.

There are different types of financing options available for potential loan seekers. Tata Capital offers the following four types of business loans.

1. Startup loans

Tata Capital offers Small and Medium Enterprise (SME) loans to aspiring entrepreneurs seeking to start a new business. Tata Capital analyzes the credit score, educational background, feasibility of the business plan as well as the assets and liabilities of the loan applicants. Once the applicant fulfills the basic criteria, the application is approved, and the amount is disbursed to the borrower's account.

2. Working capital loans

Working capital loans offered by Tata Capital helps businesses obtain funds for daily expenditure. Working capital loans are generally borrowed to meet seasonal business demands, to pay salary and wages, as well as to pay rent.

3. Term loans

Term loans are generally taken for a specific term. Such capital is used to purchase major assets like machinery or land. Tata Capital checks the applicant's bank statement, creditworthiness, business turnover, as well as the financial status of the firm before approving the loan.

4. Overdraft

Overdraft is an extension of credit wherein the borrower may withdraw more than the funds that he has deposited in his account. Such a facility helps in meeting unforeseen events and expenditure. Tata Capital levies a higher rate of interest if the overdraft exceeds the stipulated limit.

The type of funds largely depends on the requirement of the business. Loan seekers, therefore, need to identify the needs of the firm, conduct extensive research, and select the debt instrument wisely.

Procedure to obtain a Tata Capital loan

The procedure to obtain a Tata Capital business loan is quite simple. The applicant has to be at least 25 years of age and maximum 65 years of age. The firm should also have a good credit score as well as a high turnover. Besides, the business must also be profitable for the past three years. Upon fulfilling the eligibility criteria, the entrepreneurs have to submit a duly filled application form along with other documents like identity proof, address proof, bank statements, besides others. Alternatively, applicants may also conveniently apply for a loan online through the Tata Capital website.

Borrowing a loan is a huge financial decision. Hence, it is necessary to avail of one only if the business is facing a cash crunch. There are many aspects that business owners need to consider while applying for a loan, namely business loan interest rate, repayment schemes, loan tenure, besides others. Making a well-informed borrowing decision will go a long way in managing business finances efficiently.