To apply for a business loan, you must meet the eligibility criteria that the lender has set.
You must be a self-employed individual in a partnership, trading, service, or manufacturing.
You must be between the age group of 25-65 years
The enterprise must have a stable profit record in the last two years
The enterprise must have a minimum turnover of ₹10 Lakhs
You should possess Income tax returns for at least one year
The unsecured business loan eligibility is calculated after evaluating different parameters that include your business record, CIBIL score, credit utilisation ratio, and tax payment record. To be eligible for a new business loan, you must ensure:
A good CIBIL score that ranges above 700 as it plays a major role in determining your eligibility
A clear tax record; having a good tax filing history will ensure that you get a high loan amount
A clear debt repayment record assures the lender of your financial discipline
Provide Error-free Documentation: Most times, loan pleas are rejected due to missing or fake documents. You must ensure that you submit all the listed documents at the time of application, and this will ensure that you enjoy a smooth banking experience.
Make Regular Tax Payments: Your tax history is important, and defaulting on tax payments can lead to loan rejections. This makes it essential for you to make your tax payments on time.
Business Profitability: Lenders are more comfortable with businesses that are doing well. The bank is likely to reject the loan application if the business suffers losses. You should seek a secured loan in case of an unstable business record.
Future Financial Prospects: Lenders extend loans to clients who will stay stable and generate profits. If the business industry is volatile, the bank may reject the loan application, and if the loan is approved, the interest rate will be higher.
A promising and stable income assures the lender of your strong repayment capacity. This is why it has a heavy influence on your eligibility.
The minimum age required to apply for a business loan is 22 years.
The documents required for a business loan include identity proofs, duly filled application form, certified bank statements, and business proof.
No minimum salary is required when applying for a business loan as business persons do not have a fixed salary.
The eligibility requirements for a business loan usually vary from one lender to another. Here are some of the common criteria that lenders generally require you to meet:
Self-employed individuals and professionals: Businessmen, Entrepreneurs, Doctors, CAs, etc.
Legally constituted businesses: Proprietorships, Pvt. Ltd. companies, etc.
Minimum age: 21 years
Minimum business vintage: 2-3 years
Minimum annual turnover: Over ₹40 Lakhs
Credit score: Ideally over 650
Business plan: The company’s plan to utilise the funds acquired
Prior to applying, speak to your lender and get a complete understanding of their business loan eligibility criteria.
Generally, a good score, typically 700 or above, is required when applying for a business loan. However, some lenders might consider scores in the 650-700 range. Make sure to check the credit score requirements with your lender before applying, as it usually varies from one lender to another.
Follow these simple steps to check your eligibility for a business loan using a calculator:
Enter basic details like your business turnover and the estimated EMI amount in the tool
Get an estimate of the loan amount you will be eligible to borrow