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Business Loan Eligibility

Business Loan Eligibility Details

Last Updated 18th Oct 2021

  • Business loan eligibility is determined based on Age, Loan amount, Tenure, KYC Documentation, Annual Turnover, Business Vintage and others.
  • You can use a business loan EMI calculator for calculating the loan EMIs beforehand at different interest rates and tenure.
Age Minimum Age Between 21 to 65 years.
Business Vintage For self employed professional 3 years, For self employed businessmen 5 years.
Annual Turnover ₹ 1 Cr
Cibil Score 650 or above
Banking Stability 6 months and above
Eligible Entities Self employed businessman- Sole proprietors, partnership firms, private limited companies, public limited companies Self employed professionals – Doctors, CA, CS, Architects.
Apply for Business Loan @ 14.00%*

Business Loan Eligibility Criteria

The business loan eligibility criteria can be measured using following factors

Criteria Business loan eligibility criteria
Age The minimum age of the borrower must range between 21 to 65 years. However, some banks ask for a higher minimum age.
Annual Turnover The annual turnover required is ₹ 1 Cr per annum.
Banking Stability A minimum banking stability of 6 months and above is required.
Business Vintage For self-employed professional, the business should have been in existence for minimum 3 years, whereas for and businessmen should 1 years
CIBIL Score Minimum Cibil score required 650 or above
Eligible Entities Self-employed non-professionals eligible for availing business loan, Self employed businessman- Sole proprietors, partnership firms, private limited companies, public limited companies.Self- employed professionals such as Doctors, CA and CS are eligible for personal loan
Interest rate range The interest rates range from 14.00% to 30.00%. The interest rates however, vary across each page.
Maximum Loan Tenure Maximum loan tenure available up to 5 years
Other Eligibility Conditions Borrowers should own a house/workplace with ownership registered under his or her name
Required loan amount A maximum loan amount of ₹ 100 Cr can be availed

Methods to Improve Eligibility for Business Loan

For unsecured loans, every lender has a fixed set of policies. The bank will reject a loan application if a borrower fails to meet the eligibility criteria. Following are some methods to help you improve your eligibility for business loans:

  • Credit Score: Firstly, recognize the reasons contributing to a low credit score. Late payment of the credit card dues and default on loan payments can impact your credit card negatively. It is crucial to have a history of regular loan repayment and timely payments of the dues. Always make sure you have enough balance to make ECS transactions.
  • Avoid multiple loan applications: When you apply for credit from multiple banks, the chances of a loan application getting rejected increases as every query gets documented in your credit report. Applicants do not realize that any loan application declined by a bank is less likely to get approval from other banks. Banks become sceptical about lending to applicants whose loan is rejected by other lenders. You can help online financial marketplace such as MyLoanCare to avoid making multiple loan queries and negative impact on credit score.
  • Select your lender carefully: Identify the banks offering the best deal on business loans' interest rates. Choose a bank that offers quick service at low-interest rates. You can take the help of the online MyLoanCare business eligibility calculator to determine your eligibility for the loan and your loan repayment ability.
  • Business Existence and Profitability: Banks typically offer loans to firms that have existed for a minimum of three years. New companies, start-ups and companies running on loss have a meagre chance of securing an unsecured business loan. Applicants should consider the possibilities of availing of a secured business loan.
  • Apply for a loan amount per your repaying ability: Ascertain the loan amount you can repay comfortably. If you apply for an amount more significant than your eligibility, it can make your lender doubtful and may reject your loan application. Hence, ensure that you apply for the correct loan amount.
  • Maintain your paperwork: All business enterprises must have their GST registration. Applicants are also advised that they maintain an audited copy of the financial statements.
  • Pay your taxes regularly: Tax payment defaults can lead to the rejection of your loan application. Hence, applicants must pay their taxes on time.
  • Check your CIBIL score regularly: A corporation often has to borrow from banks; hence, it is advised to regularly check the credit score reports.
  • Future Defense Financial: Banks lend to borrowers who appear to be in a position to repay the loan amount. For instance, if an applicant needs a business loan for a rented shop. The bank will need the shop's lease to expire at least three years after completing the repayment period. Furthermore, the bank can refuse the loan application or offer it at a high rate if the loan industry is volatile.
  • Error-free paperwork: If the applicant's documents are missing or fake, the lender may reject the loan application. At the time of submission, applicants must ensure that they submit all the required documents. If KYC or any other record is missing, the bank will deny the application.

Business Loan EMI Calculator

A business loan EMI calculator is an online tool that helps business loan borrowers to plan their loan repayments. The calculator works digitally on a mathematical algorithm. The formula for the same is, P*r* (1+r)^n/([(1+r)^n]-1). Here P is the Principal loan amount, r is the interest rate, and n is the loan tenure.

With the help of a business loan calculator, you can get an estimate of your loan EMIs and thus plan the loan repayment before handedly. EMI calculators are highly beneficial for business loan borrowers, as the source of income for these borrowers is not fixed but unstable. Thereby, knowing the loan EMI to be paid each month helps in better cash resource planning.

FAQs

Who is eligible for a Business loan?

Any resident Indian between the age of 21 to 65 years with proof of Income tax returns can avail a business loan. The loan can be availed by sole proprietors, partnership firms, private limited companies, public limited companies, doctors, CA, CS, and Architects.

What is the eligibility for Business Loan?

The eligibility criteria of a business loan vary from bank to bank. Broadly, the eligibility criteria are that the applicants must be between 21 to 65, must have a decent cibil score of 650 and above, self-employed must have an existing business for 1 year and self employed professional must have a minimum business stability of 3 years.

How much loan can I get for my business?

The maximum loan amount you can avail for an unsecured business loan up to ₹ 100 Cr

How do I qualify for loan eligibility?

You can qualify by fulfilling the loan eligibility criteria laid out by the respective bank. The borrowers' age must be between 21 to 65 with a good credit score, KYC documents, and income tax returns.


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*Terms and conditions apply. Credit at sole discretion of lender, which is subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and collected from public sources. Read More
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