Welcome to our blog! We’re here to help you understand business loan eligibility without the jargon. Before knowing the business loan eligibility, let us first know what a business loan is, A business loan is like borrowing money for your business. You get a certain amount of cash from a bank or another place, and then you promise to pay it back with some extra money (called interest) within a set time. Businesses use these loans for different things, like paying bills, growing their company, or buying equipment. The rules for these loans, such as how much interest you have to pay and when to pay it, depend on the bank or lender. Getting a business loan can help business owners invest in their company, handle money needs, and deal with tough times, making their business more likely to do well.
Ever wondered what decides if your business can get a loan? Don’t worry, we’ve got you covered! We’ll explain important things like credit scores and collateral that affect your Business Loan Eligibility. We’ll show you how banks figure out if your business is a good match, talk about how money moves in your business, and describe how different industries talk about loans. Join us as we make business loan talk easy to understand. By the end, you’ll feel confident navigating the loan world and getting the support your business deserves. Get ready to increase your chances of success with simple words and clear insights!
Criteria for Business Loan Eligibility
1. Age Requirements:
- You need to be at least 21 years old when applying for the loan.
- Make sure you’re not older than 70 when the loan matures.
2. Who Can Apply:
- This loan is for individuals, startups, small businesses, and various types of companies involved in services, trading, and manufacturing.
3. Business Experience:
- Your business should be up and running for at least 3 year.
4. Steady Business Location:
- Your business location should stay the same for at least 1 year.
5. Annual Business Earnings:
- The business should have a minimum annual income (ITR) of 1 – 10 lakhs per year.
6. Business profitable from
- The business should have been making a profit for the last one-two year
6. Good Credit Score:
- Having a credit score of 750 or higher is better for most banks.
7. Indian Citizenship:
- You must be an Indian citizen and shouldn’t have a history of not paying back previous loans.
8. Extra Conditions:
- You should own a home, office, shop, or storage space.
What is the purpose of obtaining a business loan
Business loans serve different purposes for different businesses. Here are simple reasons why people get them:
- Money for Everyday Stuff: Some use loans to pay for everyday things like salaries, stuff to sell, or bills.
- Growing the Business: Others get loans to make their business bigger, like opening new places or making more things.
- Buying Equipment: Sometimes, businesses need loans to buy or upgrade machines or tech stuff they need.
- Keeping Things to Sell: Loans can help keep products in stock by paying for them before selling them.
- Telling People About the Business: Money from loans might go into ads or promotions to get more people to know about the business.
- Fixing Money Owed: Some use loans to bring together all the money they owe into one, or to get better terms.
- Making the Place Look Nice: Businesses might use loans to make their spaces better or attract more customers.
- Handling Ups and Downs: For businesses that change a lot during the year, loans can help handle those ups and downs.
- Starting a New Business: New businesses might need loans for starting costs and initial expenses.
- Getting Better Tech: Upgrading computers or gadgets can be a reason to get a loan.
- Saving for Emergencies: Loans can also act like a safety net for unexpected costs or tough times.
The purpose of a business loan is unique to the circumstances and goals of each business owner, and securing financing can contribute to overall business growth and stability.
Documents required for business loan
To qualify for a business loan, ensure you have the following documents:
- PAN Card: If you’re applying for a business loan, make sure you have your PAN Card handy.
- ID Proof: Give a copy of your Aadhaar Card, Voter ID, passport, Pan Card, or driver’s license for ID verification.
- Address Proof: Share a copy of your Aadhaar Card, Passport, Voter’s ID, or Driving License to confirm your address.
- Bank Statements: Provide your bank statements from the last six months.
- Income Tax Papers: Hand in your recent Income Tax Return (ITR) along with a CA certification or audit. This should cover your income details, balance sheet, and profit/loss account for the last two years.
- Proof of Business Existence: Show evidence that your business is still running, like a sales tax certificate, establishment proof, trade license, or ITR.
- Extra Papers: Include extra documents like a director-certified copy of your articles of association and memorandum, the original board resolution, or a declaration if you’re a sole proprietor or have a partnership.
Making sure you’ve got all these documents sorted will help speed up the evaluation process for your business loan.
Key benefits for business loan
- Business Growth Support: Business loans offer crucial financial support for expanding operations, whether it’s opening new branches, increasing production capacity, or venturing into new markets, fostering overall growth and profitability.
- Day-to-Day Operations Management: These loans help in efficiently managing everyday business expenses, ensuring a smooth cash flow to cover necessities like employee salaries, utility bills, and inventory costs.
- Upgrading Equipment and Technology: Entrepreneurs can utilize business loans to invest in the latest equipment and technology, enhancing productivity, efficiency, and maintaining competitiveness within the market.
- Flexible Repayment Options: Business loans often come with adaptable repayment terms, allowing businesses to choose terms that align with their financial capabilities and cash flow, reducing the strain on operational budgets.
- Building Positive Credit History: Successfully handling a business loan contributes to a positive credit history for the business. Timely repayments improve creditworthiness, facilitating easier access to future financing with favorable terms.
- Tax Benefits: The interest paid on business loans is often tax-deductible, providing businesses with potential tax benefits and reducing the overall cost of borrowing.
- Opportunity Seizure: Getting quick access to money with a business loan helps companies grab important chances in a hurry. For example, they can buy a lot of stuff at once, like a bunch of things to sell, or they can make smart investments that need fast action. It’s like having money ready to go whenever a great opportunity pops up.
Interest rate offered by different banks and NBFCs on business loan
When considering a business loan, it’s critical to compare the interest rates charged by various banks. When you borrow money, you pay interest as an added expense. This can have a significant impact on how much you wind up repaying. So, let’s look at the interest rates that various banks charge on business loans.
| BANKS | INTERSET RATE OFFERED |
| Axis Bank | 11.35 – 19.20 % |
| HDFC Bank | 10.00 – 22.50 % |
| IDFC Bank | 10.00 – 22.50 % |
| Bajaj Finserv | 09.75 – 30.00 % |
| TATA Capital | 12.00 – 30.00 % |
| Kotak Mahindra Bank | 16.00 – 26.00 % |
| ICICI Bank | 06.00 – 17.00 % |
| State Bank of India | 09.00 – 12.00 % |
| Punjab National Bank | 05.18 – 15.00 % |
| Bank of Baroda | 06.75 – 15.00 % |
| Union Bank | 09.50 – 14.80 % |
| Canara Bank | 10.50 – 18.00 % |
| Yes Bank | 12.00 – 20.00 % |
| Indusland Bank | 13.00 – 22.00 % |
| UCO Bank | 10.70 – 13.20 % |
If you have any questions or comments about our loans or anything else, please contact us by visiting divineloanhub.com.