Business loan eligibility criteria that most Banks/NBFCs require from their applicants to fulfill before loan sanctioning are below discussed. The eligibility criteria shall differ from lender to lender and usually depends on the applicant’s profile, nature of business, business requirements and various other related factors.
Eligibility Criteria for Business Loan
|Age Criteria||Min. 21 years at the time of loan application & Max. 65 years at the time of loan maturity|
|Eligible Entities||Individuals, Startups, MSMEs, Sole Proprietorships, Partnership Firms, Public and Private Limited Companies, Limited Liability Partnerships, retailers, traders, manufacturers, and other non-farm income-generating business entities engaged only in the services, trading, and manufacturing sectors|
|Business Vintage||Min. 1 year or above|
|Business experience||Min. 1 year, business location to remain same|
|Annual Turnover||Shall be defined by the Bank/NBFC|
|Credit Score||750 or above (Preferred by most private and public sector banks)|
|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 above mentioned eligibility criteria are for indicative purposes only. Actual eligibility criteria defined by Banks/NBFCs shall vary as per their sole discretion and shall be defined at the time of loan application submission.
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- Duly filled application form with Passport-sized Photographs
- KYC documents of applicants, partners, and co-applicants: Passport, Aadhar card, Voter’s ID card, PAN card, Driving license, Utility Bills (Recent Water or Electricity Bills)
- Income Proof with the Last 6 months’ bank statement
- Last 1 years ITR for existing enterprises
- Business Incorporation/Establishment Certificate
- Business Vintage and Address Proofs
- Any other document required by the lender
Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs – 2023
|Axis Bank||14.95% - 19.20% p.a.||Apply Now|
|Bajaj Finserv||9.75% - 30% p.a.||Apply Now|
|Flexiloans||1% per month onwards||Apply Now|
|HDB Financial Services Ltd.||Up to 36% p.a.||Apply Now|
|HDFC Bank||10% - 22.50% p.a.||Apply Now|
|IDFC First Bank||10.50% p.a. onwards||Apply Now|
|Indifi||1.50% per month onwards||Apply Now|
|Kotak Mahindra Bank||16% - 26% p.a.||Apply Now|
|Lendingkart||12% - 27% p.a.||Apply Now|
|Mcapital||2% per month onwards||Apply Now|
|NeoGrowth Finance||19% - 24% p.a.||Apply Now|
|Tata Capital||12% p.a. onwards||Apply Now|
|UGRO Capital||14.90% p.a.||Apply Now|
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 or urgent 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 specific and different business loan eligibility criteria, as defined by the respective lenders that applicants must qualify for availing business loans.
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 Credit Score, financial history, and source of income
- Business stability, vintage, turnover, and profitability
- Applicant’s repayment capability & creditworthiness
- Details of collateral/security to be submitted in the case of secured business loans
- Loan defaults, if any or loan repayment history
Also Compare – Business Loan Interest Rates offered by other Banks and NBFCs
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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.
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 applicant’s profile and business requirements.
Q. What is the loan amount offered under a business loan?
Ans. There is no minimum loan amount to borrow. However, the maximum collateral-free business loan is offered up to Rs. 2 crores by selected lenders.
Q. What is the preferred credit score for business loan eligibility?
Ans. The preferred credit score that financial institutions seek is 750 or above. At the time of the loan application, the bank scrutinizes the credit history of the applicant. If the credit score is lower than 750 then the Bank/NBFC 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.