Business loan eligibility criteria that most banks and NBFCs require their applicants to meet before loan sanctioning are further discussed. The eligibility criteria shall differ from lender to lender and usually depends on the applicant’s profile. These details can also be checked by accessing the business loan eligibility calculator.
Eligibility Criteria for Business Loan
|Age Criteria||Min. 18 years and above|
|Eligible Entities||Individuals, SMEs, MSMEs, Sole Proprietorship, Partnership firms, public and private limited companies, limited liability partnerships, retailers, traders, manufacturers engaged in only services, trading, and manufacturing sectors|
|Business Vintage||Min. 1 year and in profit|
|Business experience||Min. 1 year, business location to remain same|
|Annual Turnover||Min. Rs. 12 lakh and above for existing enterprises|
|Credit Score||750 or above|
|Nationality||Indian citizens, should not have defaulted on any previous loan(s) with any lender|
|Additional Criteria||Applicant must own either a residence, office, shop or godown|
Note: The following criteria are for indicative purposes only. Actual eligibility criteria can vary from bank to bank for business loan eligibility check
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- Duly filled application form with Passport-sized Photographs
- KYC documents of applicants, partners, co-applicants: Passport, Aadhar card, Voter’s ID card, PAN card, Driving license, Utility Bills (Recent Water or Electricity Bills)
- Last 6 months bank statement
- Business Incorporation Certificate
- Business Annual Turnover: Min. Rs. 10 lakh for existing businesses
- Any other document required by the bank or NBFC
Purpose of availing Business Loan
Business loans can come to the aid of individuals, business owners, startups, self-employed professionals, entrepreneurs, and MSMEs who want additional funds to meet working capital requirements, for business expansion purposes, to buy machinery/equipment, paying-off rent, salaried, debt or managing business cash flow. However, there are certain business loan eligibility criteria defined by the respective banks and NBFCs that applicants must qualify for the successful business loan application.
Also Know: How to calculate a business loan EMI?
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Factors that determine Business Loan Eligibility
The key factors that determine Business Loan eligibility are mentioned below:
- Applicant’s Age
- Nature and type of Business
- Applicant’s financial history, source of income & credit score
- Business turnover and vintage
- Applicant’s repayment capability & creditworthiness
- Business stability or profitability
- Loan defaults, if any
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Q. How does your income affect your business loan eligibility?
Ans. The income of the applicant is vital to get a business loan, as it gives a sense of security and reliability to the lender that the borrower shall be able to repay the loan on time, without getting defaulted.
Q. What is the minimum annual turnover required to apply for a business loan?
Ans. The minimum annual turnover required to apply and qualify for a business loan varies from lender to lender. However, it is Rs. 12 lakh, if you apply for a loan via paisabazaar.com.
Q. What is the minimum interest rate offered by banks or NBFCs?
Ans. The business loan interest rate starts from 16% p.a. and can exceed depending on the requirements.
Q. What is the loan amount offered under a business loan?
Ans. The minimum loan amount offered under the business loan is Rs. 30,000, however, the maximum loan amount can go up to Rs. 1 crore which may also exceed the requirements.
Q. What is the preferred credit score for business loan eligibility?
Ans. The preferred credit score that banks seek is 750 or above out of 900. At the time of the loan application, the bank will scrutinize the credit history of the applicant. If the credit score is lower than 750 then the bank might charge a higher rate of interest.
Q. Does background information affect the chances of loan approval?
Ans. Yes, background information can severely hamper the chances of loan approval. If the bank finds out there are convictions of fraud or other criminal records then they will reject your loan application.