How Do Business Loans Work?

Self-employed individuals, partners in a firm or any other services, individuals with 3 to 5 years of experience in business, businesses generating a minimum of 1.5 lakh rupees per annum, and individuals with a minimum age of 21- are eligible for the application of the said loan.

The bank will ask you to submit all the necessary documents which comprise the business loan application, any identity proof, a copy of address proof, a bank statement (the record of the past 6 months), the latest income tax return along with the document of continuation, and some other mandatory documents specified by the bank.

After the loan has been sanctioned, it has to be repaid within the time specified by the lender (bank or any legal lending party) with the interest generated for the time being along with the principal amount.

There are various user-friendly procedures for easy, burden-free repayment of the loan amount which include

  • Equated Monthly Installments (EMIs)- this means, paying a fixed small amount of money on a monthly basis for the time defined
  • Bullet payment- in this case, only the interest is paid back while the principal amount, i.e., the amount originally sanctioned by the bank is paid back to the bank as the loan tenure comes closer to termination
  • Prepayment- repaying the loan amount to the bank before the tenure of the loan ends, however, this method might be subjected to a penalty according to the guidelines of some lenders.


Finance also plays an important role in creating economic stability. By providing loans to businesses and individuals, finance helps to stimulate economic growth. In addition, by managing risk, finance helps businesses and individuals avoid costly mistakes that could damage the economy. Overall, finance plays an important role in our economy and society. It is crucial for individuals to understand some basic financial concepts so that they can make informed decisions about their personal finances and the economy as a whole.

Different finance careers

There are a variety of different finance careers available, from accountants and auditors to investment bankers and brokers. No matter what your chosen career path is, it’s important to have a strong understanding of finance concepts so that you can make sound financial decisions. The world of finance can seem complex at first, but with a little bit of study and practice you’ll be able to understand the basics. Once you have a solid foundation in finance, you’ll be able to apply your knowledge to real-world situations and make sound financial decisions that will help you reach your goals.

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