Business loan: Business loans are extremely popular to cater to an urgent need for funds to avoid any disruption in the business flow. Nowadays, you can easily apply for business loans online only with a few essential documents. Additionally, you can save more on interest by availing of tax benefits on business loans.

Tax Benefits on Business Loans

Individuals can avail of tax benefits on business loans in the following ways:

• Tax deduction on interest: The interest paid by borrowers on business loans is tax-deductible. This lowers the interest significantly and allows business owners to save more.
• Tax deduction on processing fees: You can also avail of a tax benefit on the processing fees of loans. This considerably increases the savings of business owners as there are a lot of different additional charges that have to be paid during the processing of a loan.

However, you must keep in mind that you cannot avail of a tax benefit on the principal amount of the business loan. Apart from these tax benefits, there are several other advantages of availing of a business loan.

Benefits of Business Loans

A business loan is beneficial to entrepreneurs due to the following reasons:

• The constant inflow of funds: You can have a constant inflow of working capital which can help you to meet various business-related expenses. These expenses can include purchasing raw materials, paying workers’ wages, or even affording new machinery.
• Availability of different government schemes: You can benefit from different government schemes that are suitable to support your business expenses and take them to the next level. All you need to do is check your eligibility and apply accordingly.
• Substantial loan amount: Urgent monetary needs are usually high in any business. Hence, you can opt for an extensive loan amount to cover all your immediate and urgent business expenses.
• Flexible repayment tenure: Business owners have the flexibility of choosing repayment tenure as per their convenience. This helps them to plan their funds accordingly so that they can pay EMIs timely. A Business Loan EMI calculator can be used to plan the finances better.
• Flexi loan facility: You can opt for free part prepayment of loans and pay the interest only on the amount withdrawn. This leads to a considerable reduction in the monthly installments.
• No collateral required: You do not need to pledge any property to avail yourself of a business loan. This helps you to process loans faster as you do not need to arrange for the property documents separately. At the same time, you can also avoid the risk of losing your property in case of default.
• Instant loan approval: You can receive an approval within minutes. This ensures that you can arrange for funds at any hour to meet your unplanned business expenses.
• Availability of pre-approved offers: You can also benefit from pre-approved offers that financial institutions offer to their existing customers. This will ensure that your loan request is approved without much delay.

The eligibility criteria for business loans can vary with different financial institutions. Hence, it is a must to check the eligibility criteria before applying for one.

Eligibility criteria for Business Loans

You must meet the following eligibility criteria to avail a business loan:
Self-employment
Between 25 and 65 years of age
Minimum 3 years of business vintage
A minimum income of Rs. 1.5 Lakhs per annum

After going through the eligibility criteria, you must keep all the documents ready for upload as and when required.

Documents Required for a Business Loan

The following documents are essential while applying online for a business loan:

• KYC documents such as PAN cards, voter cards, Aadhaar cards, and driving licences
• Last six months’ bank statement.
• Income Tax Returns form along with balance sheet, income computation, and last 2 years’ Profit and Loss (P&L) statement.
• Partnership deed or Sole proprietorship declaration
• A memorandum certificate
• A certified copy of the Articles of Association

Before you proceed to apply for a business loan online, remember to strictly adhere to the amount you require. This will help you save more on interest apart from the tax benefit that you are eligible for.

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