Before talking about personal loan and business loan we should know what is personal loan? And what is business loan?
Personal Loan- Personal loan is kind of unsecured loan people take to manage their personal expenses (wedding, home renovation, medical, education etc).you can take a personal loan with minimal documentation and low interest rate.
Business Loan- Business Loan is kind of loan banks give for business this is also kind of unsecured loan.
People often get confused between both of them. We can help you to figure this out.
Eligibility Criteria for personal loan–
- Minimum age of 21 years and maximum age of 65 years.
- Applicant should be salaried.
- Employed for at least 2 years.
- Minimum income 4000-20,000 ( varies according to area higher in cities DELHI, MUMBAI, PUNE ,KOLKATA, HYDRABAD).
- Applicant should be INDIAN..
- Minimum CIBIL score 750.
- Documents Required
- KYC DOCUMENTS:
- Pan Card
- Adhaar Card
- Voter’s ID
- Passport Size Photo
- INCOME DOCUMENTS, PROOF OF EMPLOYMENT:
- Salaried : Last 3 years of PAYSLIPS, 6 months salary account bank statement.
- Most recent salary certificate with form16.
Installments applicant is currently paying , all the numbers of credit cards and credit limit applicant has.
Eligibility criteria for business loan–
- Age Limit: The applicant should be min 21 years & max. 65 years.
- Income: Business should be profit making at least for the past 2 years.
- Turnover: Rs. 150,000 p.a. should be the minimum annual income.
- Co-applicants: This is optional to the applicant, not mandatory in case of business loan.
- Any self-employed filling the income tax return can apply.
Documents Required for Business Loan
- Identity proof- Driving License/PAN Card/ Passport / Voters ID card
- Address Proof (Ration card Tel/electricity Bill/ Passport/ Trade license / Lease agreement/ Sales Tax certificate)
- Bank Statement
- Latest ITR along with computation of Balance Sheet, income & Profit & Loss a/c for the last 2 yrs.
- Proof of continuation
- Other Mandatory Documents such as Sole Proprietorship Declaration, Certified true copy of Memorandum & Articles of Association
- Last 3 years audited financials
Common Documents Required for Business Loan
- Application Form: Complete loan application form with one passport size photograph
- Valid Proof of Applicant’s Identity: Passport, Photo PAN card, Voter’s identity card , Driving license and MAPIN card
- Proof of Residence: Ration card Tel/ Lease agreement/ Electricity Bill/ Passport/Trade license /Sales Tax certificate
- Proof of Age: Passport, Photo PAN card, Voter’s identity card
- Financial Documents: Copies of IT returns for the last two years along with the latest Bank statements for 6 months and P & L and balance sheet for last two years audited by a C.A.
1. Self Employed (Private Ltd. Co. and Partnership Firms): P & L Copies of IT returns for the last two years and P & L and balance sheet for last two years audited by a chartered accountant.
2. Self Employed Individuals – Professionals: Copies of IT returns for the last two years and Bank statements for last 6 months and – Professionals: P & L and balance sheet for last two years audited by a chartered accountant
3. Self Employed Individuals – Non Professionals: P & L and balance sheet for last two years audited by a chartered accountant and Copies of IT returns for the last two years and Bank statements
Documents Required for Self Employed Individuals – Professionals
- Proof of identity of sole proprietorship : Proof of identity of the sole proprietorship
- PAN ID / IT return of the concern or Municipal tax, Water, Electricity bill in the name of the concern
- Individual identity proof to be submitted for the sole proprietor : Passport, Driving license, Voter’s identity card, Photo PAN card.
- Proof of residence address for the sole Proprietor: Driving license, Ration card, Passport, Voter’s identity card
Documents Required for Self Employed Individuals – Non Professionals
- Proof of identity of the sole proprietorship
- Proof of individual identity
- Three years income tax returns
- Three years sales tax returns
- Copy of periodic stock, age wise book-debt and creditors-statement for latest three months
- Copy of last 6 months bank statement of main banker / copy of bank statement for the term loan
Business Loan Application Form is a mandatory document to be filled, it is clear that irrespective of which bank you are look to apply for a business loan, without necessary documentation the request will not be process. Keep these paper works done before approaching the bank.
- Business Loan- The interest rate can change.
Personal Loan- The interest rate won’t change. The rate is fixed from the first day.
- Business Loan- You can take loan upto 50lakhs.
Personal Loan- You can take loan upto 15-20lakhs.
- Business Loan- For business loan one should be more active in business finance than personal finance.
Personal Loan- For personal loan you must have a good credit score and back will check your eligibility of repayment by checking where you work how much your salary is and your past credit history.
- Business Loan- You can get short time or long time loan by applying.
Personal Loan- there is a fixed tenure in personal loan 1-6 years.
- Business Loan- For business loan one required to submit their business plan as well as accounting details with their application process.
Personal Loan- Personal loans doesn’t take time to get approve.
- Business Loan- Business loan can be used in any business process like equipment purchase etc.
Personal Loan- Personal Loan can be use for anything.