How to Apply Business Loan for Petrol Pump

You must have wondered how petrol pumps manage to stay stocked up with fuel, upgrade equipment, or expand to new locations. Running a petrol pump is a capital-intensive business, and securing the right financing is essential for smooth operations.

If you’re planning to start a petrol pump or improve your existing one, a business loan can provide you with the financial support you need. Now arises the question: What type of loans are available? How can you apply? What are the eligibility criteria?

Look no further as this guide answers all the questions about obtaining a business loan for petrol pump, its benefits, the application process and required documentation.

Business Loan for Petrol Pump: A Detailed Overview

Business loans for petrol pumps are tailored for fuel station proprietors who need funding for petrol pump requirements like:

• Setting up a new petrol pump
• Expanding existing infrastructure
• Purchasing fuel stock
• Upgrading machinery and storage tanks
• Managing operational expenses

Various financial institutions, such as banks and NBFCs, provide business loans to clients. They offer competitive petrol pump loan interest rates that support flexible payment options and free-collateral loans in specific cases. Business loans from lenders are of two types:

1. Secured loans that require assets as collateral
2. Unsecured loans that do not need any asset guarantee

Types of Business Loan for Petrol Pumps

Here is a table depicting different types of business loans:

Features and Benefits of Business Loan for Petrol Pumps

Getting a business loan for your petrol pump comes with various advantages, such as:

• Loan Amount Flexibility: The loan amount extends from ₹40,000 to ₹50 lakhs, depending on your business requirements.
• Fast Approval: The loan processes quickly, allowing businesses to obtain their funds within a few days.
• Collateral-Free Options: Financial risks decrease when borrowers obtain unsecured loan offerings from certain lenders.
• Flexible Repayment Tenure: Repayment duration is up to 3 years (36 months) with manageable EMIs.
• Competitive Interest Rates: Customers who maintain good financial records and hold high CIBIL scores can access reduced interest rates on borrowing.
• Minimal Documentation: The application procedure requires minimal documentation because it has easy-to-follow processes.

How to Apply for a Petrol Pump Business Loan?

The application process for business loans at petrol pump establishments is straightforward. Here's how:

• Most banks and NBFCs let customers access applications through their websites. To simplify the process of finding the best loan lender and applying for one, access My Mudra.
• Your application process begins by completing the provided form that demands business information, financial details and the requested borrowing sum.
• You must upload documents for KYC, business registration information, and financial statements.
• Determine your business loan's monetary value and the duration in which it needs to be repaid.
• You will obtain both confirmation and a tracking ID when your application is submitted correctly.
• A representative from the lender organisation may reach out to you for verification purposes.
• The process of loan approval results in the direct transfer of funds into your bank account when your application is authorised.

Eligibility Criteria for Petrol Pumps Business Loan

The loan application process includes varied requirements per lender institution, which typically consist of the following:

Basic Eligibility Criteria

Eligible Entities

• Self-employed Professionals: Doctors, Chartered Accountants, Architects, etc.
• Self-employed Non-Professionals: Traders, retailers, petrol pump owners, and manufacturers.
• Business Entities: Private limited companies, partnership firms, LLPs and trusts.

Document Required for Petrol Pump Loan

When applying for a business loan, you must submit the following documents:

MSME Loan for Petrol Pump

The MSME loan is a business financing product created to serve Micro, Small and Medium Enterprises and their subsector, petrol pumps. These loans receive government scheme backing that provides borrowers with reduced interest rates.

Benefits of an MSME Loan for Petrol Pumps:

• No collateral is required under many schemes.
• The interest rates on MSME loans are lower than those from traditional lenders.
• Government-backed schemes like MUDRA, CGTMSE, and Stand-Up India are available.
• Quick approvals for eligible businesses.

Government Schemes for MSME Petrol Pump Loans:

• Pradhan Mantri MUDRA Yojana (PMMY): Offers loans up to ₹10 lakh under the Shishu, Kishor, and Tarun categories.
• Stand-Up India Scheme: Provides loans for SC/ST and women entrepreneurs starting a fuel business.
• CGTMSE Scheme: Offers collateral-free loans for small businesses.

What Factors Do Lenders Consider Before Approving Your Loan for Petrol Pump?

Before approving a business loan for a petrol pump, lenders assess several factors:

• Supplier Credibility: Your association with a well-established oil supplier improves loan approval chances.
• Competition in the Area: Lenders analyse nearby petrol pumps and the overall demand in your location.
• Traffic and Location: A prime location with high traffic ensures a better revenue system.
• Business Experience: Having prior experience in fuel retail can increase your loan approval chances.

Summing Up

A business loan for a petrol pump is an important financial tool that can help you start, expand and manage your fuel business efficiently. You can get funds for infrastructure, inventory and equipment upgrades. Multiple loan options are available, including term loans, working capital loans, and MSME schemes.

With minimal documentation, flexible repayment terms, and competitive interest rates, securing a loan is now easier than ever. Apply today for a petrol pump loan on My Mudra and fuel your business growth!

Also read: Get Online Business Loan up to ₹2 Crore