Following are the Business loan eligibility criteria that most banks and NBFCs require their applicants to meet before loan sanctioning. Business loan eligibility criteria shall differ from lender to lender. These details can also be checked with the help of business loan eligibility calculator.
|Age Criteria||Min. 18 years and Max. 65 years|
|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. 2 years and in profit|
|Business experience||Min. 2 years, business location to remain same|
|Annual Turnover||Min. Rs. 25 lakh and above|
|CIBIL Score||700 or above|
|Nationality||Indian citizen, should not have defaulted on any previous loan with no criminal background|
|Additional Criteria||Applicant must own either a residence, office, shop or go down|
Note: The following criteria are for indicative purposes only. Actual eligibility criteria can vary from bank to bank for business loan eligibility check
Business loan can come to the aide of individuals, business owners, startups, self-employed professionals, entrepreneurs and MSMEs who want additional funds to meet working capital requirements, to buy machinery/equipment or for business expansion purposes. However, there are certain business loan eligibility criteria that applicants must qualify for the successful business loan application.
Also Know: How to calculate a business loan EMI
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How is Business Loan Eligibility Calculated?
Business Loan eligibility is calculated on basis of various factors as mentioned:
- Applicant’s Age
- Nature of Business
- Financial History
- Business Turnover
- Business Vintage
- Source of Income
- CIBIL score/Credit Report
- Repayment Capability
- Business stability or profitability
- Loan defaults, if any
Documents Required for Getting a Business Loan
Document verification is done by banks to ensure that the customers are meeting the required business loan eligibility criteria defined by the respective bank. The following documents are required to verify business loan eligibility criteria.
- Business Plan
- Duly filled application form with Passport-sized Photographs
- KYC documents of applicants, partners, co-applicants
- Business address and vintage proof
- Permanent Account Number or PAN Card
- Bank statement for the previous 6 months
- Latest Income Tax Returns (ITR), income, balance sheet, and profit and loss account for last 2 Years (audited by a chartered accountant)
- Proof of continuation which includes; ITR, trade license, establishment, sales tax certificate
- Mandatory Documents: Sole Proprietor Declaration, Certified Copy of Partnership Deed, Certified true copy of Memorandum, and Articles of Association which must be certified by Director and original copy of Board resolution
Along with this certain Know Your Customer (KYC) documents are also required. These are mentioned below:
|Identity Proof||Aadhaar Card, Passport, Voter ID Card, PAN Card, Driving License|
|Address Proof||Aadhaar Card, Passport, Voter ID Card, Driving License|
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How to Improve Eligibility for Business Loan?
If a client’s business loan application is rejected then they can improve their eligibility through the following ways:
One of the reasons a client’s business loan application can be rejected is missing or fake documents. Applicants must ensure that they submit all the requisite documents at the time of application. Indeed, the bank will reject the application if KYC or any other documents are missing.
Banks typically extend loans to businesses that are running profitably. So, if your business is running on loss then the bank will reject the application. In this scenario, it is best advised that the client seek a secured loan.
Regular Tax Payments
Defaults on tax payment can lead to loan rejections. Thus it is absolutely essential that customers pay their taxes on time
Future Financial Security
Banks extend loans to those clients who seem able to repay the amount. For example, if a customer seeks a business loan to renovate a rented shop. The bank will require that the lease of the shop expire at least 3 years after the end of repayment date. Also, if the industry for which the loan is applied for is too volatile then the bank might reject the loan application or give it at a high interest rate.
How to Apply for Business Loan?
Prospective clients can apply for a business loan through the following ways:
Customers who seek a business loan can apply for one through Paisabazaar.com. Simply follow the steps written below:
- Visit paisabazaar.com and go to its business loan application page
- Mention the requisite details
- Fill out the comprehensive form and click on View Best Offers
- Suitable business loans deals will be displayed
- Select the business loan of choice and fill out the details
- An agent will call and set a date and time to pick up the documents for verification.
- Once the documents are verified, the loan will be sanctioned
- Post-loan sanctioning, the loan amount will be credited to your bank account
The Bank or NBFC will scrutinize the documents and ensure the client meets the business loan eligibility criteria. Finally, the bank or NBFC will revert back to the customer with the verdict on loan approval.
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FAQs on Business Loan Eligibility
Q. What are the business loan eligibility criteria?
Ans. The business loan eligibility criteria is as mentioned below:
- Age Criteria: Minimum 18 years & Maximum up to 65 years
- No previous loan defaults
- Applicants with good CIBIL score shall be given preference by banks
- Indian Citizen with no criminal record
Q. How does your income affect your business loan eligibility?
Ans. 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 age required to apply for a business loan?
Ans. The Minimum age to apply for business or MSME loan is 18 years.
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 is Rs. 25 lakh.
Q. What is the minimum interest rate offered by banks or NBFCs?
Ans. The business loan interest rate starts from 13% onwards and can exceed depending on the requirements.
Q. What is the loan amount offered under business loan?
Ans. The minimum loan amount offered under business loan is Rs. 10,000 and the maximum loan amount can go up to Rs. 50 crore which may exceed as per the requirements.
Ques. Who is eligible for Business loan?
Ans. Business loans can be availed by traders, retailers, manufacturers, startups, self-employed professionals, entrepreneurs, business owners, micro-small and medium enterprises, sole proprietorship, partnership firms, limited liability partnership, etc.
Q. What is the preferred credit score for business loan eligibility?
Ans. The preferred CIBIL score that banks seek is 700 onwards out of 900. At the time of loan application, the bank will scrutinize the credit history of the applicant. If the credit score is lower than 700 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.