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Business loan eligibility criteria that most Banks/NBFCs require from 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, nature of business, and business requirements.
Eligibility Criteria for Business Loan
| Age Criteria | Min. 18 years and Max. 65 years |
| Eligible Entities | Individuals, MSMEs, Sole Proprietorships, Partnership firms, Public and Private Limited Companies, Limited Liability Partnerships, retailers, traders, manufacturers, and other business entities engaged in only services, trading, and manufacturing sectors |
| Business Vintage | Min. 1 year or above |
| Business experience | Min. 1 year, business location to remain same |
| Annual Turnover | Min. Rs. 12 lakh and above for existing enterprises, may vary as per the lender |
| 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 checks.
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Documents Required
- 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)
- Income Proof with Last 6 months’ bank statement
- Business Incorporation Certificate
- Business PAN card and Address Proof
- Any other document required by the Bank/NBFC
Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs – January 2023
| Bank/NBFCs | Interest Rate | |
| Axis Bank | 14.95% - 19.20% p.a. | Apply Now |
| Bajaj Finserv | 9.75% - 25% 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 | 15% p.a. onwards | Apply Now |
| Indifi | 1.50% per month onwards | Apply Now |
| Kotak Mahindra Bank | 16% - 19.99% p.a. | Apply Now |
| Lendingkart | 1% - 2% per month | 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 |
Note: Business loan interest rates are updated as on January 2023.
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
- Credit Score (CIBIL Score)
- Applicant’s financial history and source of income
- Business turnover and vintage
- Applicant’s repayment capability & creditworthiness
- Business stability or profitability
- Loan defaults, if any
Also Compare – Business Loan Interest Rates offered by other Banks and NBFCs
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FAQs
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 requirements.
Q. What is the loan amount offered under a business loan?
Ans. The minimum loan amount offered under the business loan is Rs. 10,000, however, the maximum loan amount can go up to Rs. 2 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.