Business Loan · Guide
What is a business loan?
A business loan is a credit line advanced to a business entity for legitimate business needs - inventory, machinery, hiring, or expansion. Unlike personal loans, the underwriting relies on business financials rather than individual salary slips.
By FinancePaisa Editorial Team · Research & editorialUpdated · 1 min read
On this page (4 sections)
Who takes business loans
- Proprietorships and partnerships
- Limited Liability Partnerships (LLPs)
- Private limited companies
- Traders, manufacturers, and service providers
- Retailers and e-commerce sellers
Secured vs unsecured business loans
Secured business loans pledge assets such as property, inventory, or machinery, and enjoy lower rates. Unsecured business loans rely on cash-flow strength and typically cap at ₹50 lakh to ₹1 crore at higher rates.
Advertisement
Government-backed schemes
| Scheme | Loan size | Purpose |
|---|---|---|
| PMMY – Shishu | Up to ₹50,000 | Very small enterprises |
| PMMY – Kishor | ₹50,000 to ₹5 lakh | Small growing units |
| PMMY – Tarun | ₹5 lakh to ₹10 lakh | Established micro units |
| CGTMSE | Up to ₹5 crore | Collateral-free MSME lending |
| Stand-Up India | ₹10 lakh to ₹1 crore | SC/ST and women entrepreneurs |
PMMY – Shishu
- Loan size
- Up to ₹50,000
- Purpose
- Very small enterprises
PMMY – Kishor
- Loan size
- ₹50,000 to ₹5 lakh
- Purpose
- Small growing units
PMMY – Tarun
- Loan size
- ₹5 lakh to ₹10 lakh
- Purpose
- Established micro units
CGTMSE
- Loan size
- Up to ₹5 crore
- Purpose
- Collateral-free MSME lending
Stand-Up India
- Loan size
- ₹10 lakh to ₹1 crore
- Purpose
- SC/ST and women entrepreneurs