A commercial loan is offered to business units by banks and NBFCs. These loans can be used for any purpose of the business like buying an asset or machinery or for meeting working capital requirements. These loans can be secured or unsecured in nature depending on the lender and the purpose and tenure of the loan. Some details of these loans are mentioned below.

Additional Reading: Reasons To Apply For A Commercial Loan

Eligibility

The eligibility for commercial loans is tabled below.

Category

Details

Eligible applicants
  • Sole proprietorship
  • Partnership firms
  • Private limited companies
  • Public limited companies
  • Limited liability partnership

Age 

Minimum 21 years

Maximum 65 years

Minimum turnover requirement

As per lender guidelines

Minimum business existence

Minimum 2 to 5 years (as per lender’s guidelines)

Documents

The list of documents usually needed for commercial loans are,

Category

Details 

Identity Proof

Driving Licence, PAN Card, Aadhar Card, Voter’s Id, etc.

Address Proof

Passport, Latest Utility bills, Rent Agreement, etc.

Business Proof

Latest ITR, latest financial statements, etc. 

Income Proof

ITR for the past years as per lender guidelines, bank statements for the past 6 months, etc.

Additional documents

Board Resolution, Memorandum of Association, Articles of Association, Partnership Deed, Sole Proprietorship Declaration, etc. 

 

Types of commercial loans 

There are many types of commercial loans that can be availed by borrowers. These loans are available based on the purpose of the loan and other relevant factors or parameters of the lenders. Some of the common types of commercial loans are mentioned below.

  • Term loans
  • Lease financing options
  • Construction equipment loan
  • Bank overdraft facility
  • SME collateral-free loans
  • SME credit card
  • Commercial vehicle loan
  • Bank guarantee
  • Letter of credit

Final Thoughts

Commercial loans are available for eligible businesses for multiple purposes like growth and expansion of business or for meeting working capital requirements, purchasing any equipment, etc. These loans can be availed by small businesses or big business houses to meet their financial requirements.