Running a business often requires access to timely funding, whether it's for day-to-day operations, expansion, purchasing equipment, or boosting working capital. For small businesses, loans up to Rs. 10 Lakh are an ideal solution to meet short-term financial needs without overburdening themselves with heavy debt.
But how can small businesses secure a loan of up to Rs. 10 Lakh? This blog will guide you through the eligibility criteria, loan application process, and the best options available—be it through banks, NBFCs, or government schemes.
Why Choose a Business Loan up to Rs. 10 Lakh?
A business loan of up to Rs. 10 Lakh is ideal for small-scale businesses, startups, or individual entrepreneurs who need quick and manageable funding. Here's why:
- Quick Access to Funds: Perfect for meeting short-term operational needs or urgent requirements.
- Minimal Collateral: Many lenders offer such loans without requiring heavy collateral.
- Manageable EMIs: The loan amount ensures that monthly repayments are affordable for small businesses.
- Flexible Use: Can be used for inventory purchase, marketing expenses, equipment buying, or office setup.
Where to Get Business Loans up to Rs. 10 Lakh?
Here are some of the best options for securing business loans up to Rs. 10 Lakh:
1️. Banks
- Public Sector Banks: Offer competitive interest rates and structured repayment terms.
- Private Sector Banks: Known for faster processing and digital application methods.
Benefits:
- Lower interest rates (starting from 7% for secured loans).
- Loan tenure of up to 5 years or more.
Drawbacks:
- Stringent eligibility criteria, including high credit scores.
- Slower approval process compared to NBFCs.
2️. NBFCs (Non-Banking Financial Companies)
- NBFCs specialize in small-ticket loans and cater to businesses with minimal credit history.
Benefits:
- Faster approval and disbursement (as quick as 48 hours).
- Flexible eligibility criteria.
Drawbacks:
- Higher interest rates (ranging from 12% to 26%).
- Shorter loan tenure.
3️. Government Schemes
The Government of India has introduced several initiatives to support MSMEs (Micro, Small, and Medium Enterprises):
- PMMY – MUDRA Loans: Loans under the MUDRA Yojana are available up to Rs. 10 Lakh, categorized as:
- Shishu: Loans up to Rs. 50,000.
- Kishore: Loans from Rs. 50,000 to Rs. 5 Lakh.
- Tarun: Loans from Rs. 5 Lakh to Rs. 10 Lakh.
- No collateral required for loans under MUDRA.
- Interest rates start from 8.5%, depending on the bank and borrower's profile.
- Stand-Up India Scheme: Offers loans between Rs. 10 Lakh to Rs. 1 Crore for women entrepreneurs and SC/ST-owned businesses.
Benefits of Government Schemes:
- Subsidized interest rates.
- No collateral for smaller loans.
- Tailored specifically for MSMEs and startups.
Explore More: If you're looking for additional funding options, check out our Government Grants Services.
Eligibility Criteria for Business Loans up to Rs. 10 Lakh
While eligibility may vary across lenders, here are the general criteria:
1️. Business Type
- Sole proprietors, partnerships, private limited companies, and MSMEs are eligible.
- Startups in operation for at least 1-2 years are preferred.
2️. Annual Turnover
- A minimum annual turnover of Rs. 5-10 Lakh is typically required, although this depends on the lender.
3️. Credit Score
- A CIBIL score of 650 or above improves the chances of loan approval.
- NBFCs and government schemes are more lenient with lower credit scores.
4️. Income Proof
- Bank statements for the past 6-12 months and ITR (Income Tax Returns) for the last 2 years are generally required.
5️. Documentation
- Business registration certificate.
- GST registration, if applicable.
- KYC documents (PAN card, Aadhaar card, etc.).
Steps to Get a Business Loan up to Rs. 10 Lakh
Follow these steps to secure a business loan up to Rs. 10 Lakh:
Step 1: Assess Your Needs
- Determine the exact loan amount required and how you plan to use the funds.
Step 2: Compare Lenders
- Research banks, NBFCs, and government schemes to find the best interest rates, loan terms, and eligibility criteria.
Step 3: Check Eligibility
- Review the lender's eligibility criteria and ensure your business qualifies before applying.
Step 4: Prepare Documentation
- Gather all necessary documents, including financial records, business registration proof, and ID proofs.
Step 5: Submit Your Application
- Apply through the lender's online portal or visit their branch for assistance.
- Many lenders now offer digital application processes for faster approvals.
Step 6: Await Loan Approval
- The lender will evaluate your application, creditworthiness, and documentation.
- Once approved, the loan amount will be disbursed directly to your account.
Tips to Increase Chances of Loan Approval
Follow these tips to enhance your chances of securing a business loan:
Maintain a High Credit Score
- Ensure timely repayment of previous loans and credit card bills to boost your credit score.
Keep Documentation Updated
- Ensure all financial and KYC documents are accurate and up-to-date.
Demonstrate Business Stability
- Highlight consistent cash flow, a strong client base, and steady growth in your business proposal.
Apply for the Right Loan
- Choose a loan product that aligns with your repayment capacity and business goals.
Pro Tip: Learn how to convince organizations for funding with our Pitch Deck Services.
Success Stories
- Local Retailer in Gujarat
- A small shop owner in Gujarat secured Rs. 8 Lakh under the MUDRA Yojana (Kishore) to expand inventory and upgrade store interiors. The business witnessed a 30% increase in sales within six months.
- Catering Business in Delhi
- A catering startup in Delhi availed a Rs. 10 Lakh loan from an NBFC to invest in new kitchen equipment. Faster processing allowed them to fulfill larger orders, boosting revenue by 40%.
Conclusion: Why Rs. 10 Lakh Business Loans Are a Game-Changer
For small businesses, a Rs. 10 Lakh loan can be the stepping stone to success. Whether you choose to apply through banks, NBFCs, or government schemes, understanding your options and planning strategically will ensure you secure the best funding for your business needs.
FAQs for Business Loans
Can I get a Rs. 10 Lakh business loan without collateral?
Yes, many lenders, including NBFCs and government schemes like MUDRA Yojana, offer collateral-free business loans of up to Rs. 10 Lakh. These loans are typically based on your creditworthiness, business performance, and financial stability.
What is the minimum credit score required to get a business loan of Rs. 10 Lakh?
While the exact requirement may vary, most lenders prefer a CIBIL score of 650 or above for approval. NBFCs and government schemes, however, may approve loans for applicants with lower scores but strong business performance.
How long does it take to get a business loan of Rs. 10 Lakh approved?
The approval time depends on the lender:
- Banks: Typically take 7–15 business days due to their rigorous process.
- NBFCs: Provide faster approvals, often within 48–72 hours.
- Government Schemes (e.g., MUDRA): May take 5–10 days, depending on documentation and verification.
What documents are required to apply for a Rs. 10 Lakh business loan?
The documents typically include:
- Business registration proof.
- PAN card and Aadhaar card.
- Bank statements (last 6–12 months).
- Income Tax Returns (last 2 years).
- GST registration (if applicable).
Looking for experts to secure a business loan?
Explore more funding options and prepare your business proposal with our Pitch Deck Services , or check out our Government Grants Services for additional support.
Disclaimer: The information presented in this blog is sourced from various online platforms and government portals.