Nowadays, businesses can avail of different financial products to fulfill various objectives. One of the most popular forms of financial assistance is a loan for a business. This can help enterprises finance different requirements without any hassle. You can claim tax benefits.
Let us learn more about loans for a business, how to apply for a Business Loan, and how to write off its repayment to claim tax benefits.
What is a Loan for Business?
A Business Loan is a type of financial product that can be availed of by a business to meet its multifarious financial requirements. It is usually unsecured, meaning you are not required to put any asset as collateral against the loan amount.
Furthermore, a Business Loan has several features and benefits you can use when applying for this financial product. Let us take a look at the various advantages of a Business Loan:
- Zero Collateral Required – As previously stated, a Business Loan is typically collateral-free. This allows you to apply for one without worrying about putting any asset as security against the loan.
- Attractive Interest Rates – Some NBFCs offer Business Loans at attractive interest rates. This is great for small businesses looking for a loan for business to fulfill various financial requirements.
- Long Tenure – Many NBFCs offer Business Loans with long tenure to allow you to repay the loan over an extended period. The tenure can be agreed upon by both parties beforehand. You can also find Business Loans with a flexible repayment tenure of up to 36 months.
- High Loan Amount – Business Loans often come with a high loan amount that can help you fulfil most of your financial obligations. Some financial institutions even offer Business Loans with a high loan amount of up to ₹50 Lakh.
- Simplified Documentation – Nowadays, you can easily apply for a Business Loan with NBFCs that offer a simple documentation process. All you need to do is submit the basic KYC documents required for the loan when applying online, and you’re good to go. This also helps in speeding up the overall loan process.
- Convenient Online Process – It has become easier to apply for a Business Loan online as it is extremely convenient. Applicants can follow the steps mentioned by their lender for the online loan application and submit it accordingly.
- Swift Disbursal – A quick loan process also means quicker loan amount disbursal. If you meet the eligibility criteria and submit the correct documents, your loan application, and subsequent disbursal can be completed swiftly.
What’s more, apart from the abovementioned features & benefits, you can also enjoy tax write-offs when filing your returns.
How Can I Write Off the Repayment of my Business Loan?
When you get a Business Loan, you can enjoy certain financial advantages in the form of some tax benefits. Let’s find out how you can write off your loan repayment.
When you repay your Business Loan, you need to pay interest on the amount. The rate of interest is determined or set by the lender. Since the loan has been availed of for business purposes, you can write off the interest payment when filing returns.
Note: While the interest paid on the repayment of the Business Loan is tax deductible, do note that it’s only for a new loan. The same cannot be written off if the new loan is being used to pay off another loan or past debts.
Furthermore, note that the principal amount, i.e., the total loan you receive, is not tax deductible.
How to Apply for a Business Loan?
To apply for a Business Loan with your chosen lender, simply follow the steps mentioned below:
- Step 1: Visit the lender’s website
- Step 2: Select ‘Business Loan’
- Step 3: Click on ‘Apply Now’
- Step 4: Enter your details
- Step 5: Wait for the assessment and verification of the loan application
- Step 6: Upon approval, receive the confirmation
- Step 7: Authorize disbursal and receive the loan amount
Conclusion
The interest on a Business Loan can be considered tax deductible if it’s a new loan that has been availed of solely for business purposes.
