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Whether it's a start-up or a recently established company, every business needs financial assistance for day-to-day activities, to turn profitable. The funds can be obtained with the help of a business loan. Banks and financial institutions offering business loans require the enterprise to submit their Income Tax Return (ITR). Lenders usually ask for it to check your income and assess your financial stability.
However, start-ups and new businesses generally do not have substantial revenue reflected in their ITR. In such cases, submitting just the ITR filing may negatively impact their loan eligibility. Thankfully, you can get a business loan even without an ITR. Lenders typically require other documents as proof of stable income or collateral to issue a business loan in such cases.
Lenders evaluate factors like your age, credit score, and business profile before approving the loan. You need to fulfil the following eligibility criteria to qualify for a business loan without an ITR:
You must be an Indian resident
You need to be at least 18 years old to apply
You must be below 65 years of age at the time the loan duration ends
You need to have a CIBIL score of 700 or above
Collateral is not required, except for equipment finance, bill discounting, or letter of credit. The loan amount may range up to ₹50 Lakhs, depending on your business requirements and credit profile.
The following are the eligible entities that can get business loans without submitting ITR:
Individuals
Companies
Retailers
Manufacturers
Limited Liability Partnerships (LLPs)
Partnerships
Sole proprietorships
Co-operative societies
Start-ups
First-time business owners
The paperwork you need to submit may vary, depending on the lender’s policies. Here are some of the basic documents required to apply for a business loan without an ITR:
Duly filled application form
Identity proof such as a voter ID, passport, driving licence, etc.
Business proof such as business plan, cash flow statement, P&L statement, or balance sheet
Address proof such as electricity bill, passport, etc.
PAN card of the company, individual, or partner(s), whichever is applicable
Company’s Incorporation Certificate
Partnership Deed or Memorandum of Association (MoA)
Shops and Establishment Certificates
Rent agreement
Current account bank statement
You can enhance your chances of getting a business loan without an ITR by following certain tested strategies. These include:
Some lenders may not require you to provide your ITR to approve your business loan if you offer collateral. It increases your eligibility and reduces the risk posed to the lender.
Financial institutions, private lenders, and NBFCs often provide loans based on a healthy CIBIL score. If your CIBIL score is at least 700, you may be eligible to get unsecured loans without an ITR.
Improve your chances of loan approval by providing other mandatory documents on time. These include your KYC documents as well as bank statements, P&L statements, cash flow statements, and more.
By making another family member a co-applicant, you may be able to get approval for a business loan without your ITR. In this case, your co-applicant will need to provide his/her ITR to the lender.
The government has introduced several schemes to encourage the youth, women, and underserved individuals to encourage entrepreneurship. The National Small Industries Corporation (NSIC) Subsidy, some types of MUDRA loans under the Pradhan Mantri Mudra Yojana (PMMY) are some schemes you can apply for. You can check if you are eligible to apply with other financial statements to prove business stability.
Lenders usually require you to submit ITR for at least 2 years. Many lenders today also offer business loans to start-ups even without an ITR. However, they may require other documents as proof of business stability or collateral to issue the loan.
Yes, you can get a business loan if you do not file an ITR. To apply for a loan without an ITR, you will need to submit other documents as proof of your income.
Some drawbacks of applying for a business loan without ITR include:
Delay in processing the loan application
Less amount sanctioned
Comparatively shorter repayment tenure
In general, business owners who have very recently started an enterprise may be eligible for a business loan without having filed an income tax return.
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