Check Business Loan Eligibility

Business Loans Eligibility

A business loan can be availed with or without security, it depends on the bank that offers loan and then the amount of risk they are ready to take. Whether business loan is for an existing business or to start a brand new one, there are many banks in India that offers loan for both small and big businesses. Getting approval and money is possible within few days if you have all necessary documents and if you meet the eligibility criteria. Here is the list of eligibility criteria to apply for a business loan in India.

Eligibility Criteria for Different Employment Types

  • Limited or Private Limited Company
    Net income of the concern should be more than Rs. 150,000 per annum for business loan up to Rs. 1.5 million and over Rs. 300,000 for business loan above Rs. 1.5 million.
  • Partnership or Proprietorship Firm
    A minimum of 25% stake each can be clubbed to the income of the concern
  • Chartered Accountant / Self Employed Professional
    Who possess diploma or degree in any of these discipline like art / craft /profession or Who possess the skill that is considered as a profession from banks perspective shall be considered for any financial assistance. For example: Dental Surgeons, Accountants, Medical Practitioners, Engineers, Craftsmen, Management consultants, Construction contractors etc.

Factors Deciding Business Loan Eligibility

To be eligible for a business loan there are a lot of factor that are considered. Every bank that offers loan will look into many criteria prior to sanctioning it. Few important ones are:

  • Age Limit: The applicant should be min 21 years & max. 65 years.
  • Income: Business should be profit making at least for the past 2 years.
  • Turnover: Rs. 150,000 p.a. should be the minimum annual income.
  • Co-applicants: This is optional to the applicant, not mandatory in case of business loan.

Factors that Negatively Impact Business Loan Eligibility

There are main factor that affect business loan eligibility directly and indirectly, some on the critical ones are explained below. This helps each individual to make sure they are legally eligible for a business loan. The negatively impacting factors are:

  • Credit Rating: Each individual applicant’s credit worthiness is evaluated by the bank before processing the application. Good credit rating will increase the chance of getting the loan with more flexibility. Default payments, fraudulent activities, and outstanding huge loan will impact negatively on the potential, if one bank rejects you application due to credit rating issue; there is less chance of other banks accepting it, unless you are ready to pay big amounts as interest.
  • Employer: If the employer with whom the applicant is working has a bad reputation in the market, without any second consideration, the application will be rejected. There are ample examples of this type seen often. The employer should be having a good credit rating, there are many rating agencies that rate these companies in today’s market and this information is readily available online for each and every one. Working for such employer should be reconsidered as it will not just affect you when applying loans by also to the career itself in the long run.
  • Criminal Background: If ever the applicant has had a criminal background or if there is a suspect case filed against the applicant, there is absolutely no probability of getting a loan. All banks will be willing to offer loan only to those who are capable of paying the principal amount along with interests and those who are good in the eyes of law.
  • Business Instability: It’s a crucial aspect for business loan consideration. If the income of the business is not stable and the profit is marginal then banks will be in need of collateral for approving the loan. Weak profit will affect the business negatively, thus it is essential to apply for a business loan only if the business is able to meet all eligibility criteria.

Customer Profiles that Banks Consider for Business Loans

There are various types of business loan customers, while some are direct individual who are self-employed or salaried, the other are entities and companies. A big bank will have both types of customers when it comes to a request of business loan. The criteria, applicant judgment style, measurability, rate of interest and tenure will differ according to each customer type. Thus while applying for a loan, check which customer category you belong to and accordingly look for the eligibility criteria.

  • Self Employed Professionals (SEP) are usually Chartered accountants, allopathic doctors, company secretaries, architects and designers who are practicing a profession. The other type is Self-Employed Non-Professionals (SENP) such as the traders and manufacturers. The eligibility criteria, documentation requirement, interest rate; loan tenure alters per their category.
  • Entities - Limited Liability Partnership, Partnerships firms, Private Limited and closely-held Limited companies are those that fall under this category. This even includes banks and non-banking financial companies who are looking for funds from reputed banks.
  • Other constitution types depending on the business profile on a case by case basis are considered by banks, the criteria for these are mentioned in every bank’s policies and procedures.

Comparison of Business Loan Eligibility Criteria across different Banks/NBFCs

Every bank has unique eligibility criteria according to the types of borrowers, location, age of the applicant and so on. Finding a right bank that serves your need is left up to you, though the online applications can help the applicant with variety of options, the choice is left to each individual/ business owner. Here is the list of few top banks and their eligibility criteria for business loan; this can be used to understand per which bank you are eligible for a business loan.

Axis Bank Business Loan Eligibility Criteria

No matter if you are a big corporate house or a small business owner if you are looking forward for the business loan than Axis bank is always there for you. Axis bank provides the business loan against the property. One of the most important features of the loan are competitive interest rate & doorstep service. Axis bank offers the business loan with the repayment tenure of 15 years.

Documents Required

  • Proof of identity (passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • Proof of address (latest utility bill/ ration card/passport)
  • Proof of income (Salary slip of last 6 months, 6 months bank statement, form 16 of current year)
  • All the lease documents (if applicable)

Eligibility Criteria

  • The minimum age of the applicant should be at least 24 years. The maximum age of the applicant can be 65 years.
  • The salaried applicant should be working in a reputed private company or a government company
  • Any self-employed filling the income tax return can apply

Capital First Business Loan

If you are looking for the flexibility in term of processing & documentation then Capital First is the place for you. The highest loan amount offered by the bank is 75 lakh which is enormously huge when it comes to other banks & financial institutions. No guarantor is required when you are applying for the business loan at capital first.

Documents Required

  • Filled application form
  • Valid identity proof (passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • Valid address proof (latest utility bill/ ration card/passport)
  • Financial documents: income tax return & profit & loss & balance sheet of last 2 years, last 6 months bank statement & business proof.
  • Current year performance and projected turnover on letterhead of the entity

Eligibility Criteria

  • The minimum age of the applicant should be of 24 years. The maximum age of the applicant should not exceed to 65 years
  • The business should be making profit for the last 1 year
  • The current business should be at least 48 months old
  • The applicant should have at least 60 months of business experience.

Citibank Business Loan Eligibility Criteria

Citibank is one of its own kind when it comes to approval & disbursal of the loan. The brand is known to have released a business loan within 48 hours. The repayment tenure of the bank is 10 years. Apart from business loan Citi bank also offers the top up loan. So, this multiple loan options for the same individual at very competitive rate are the major perks to choose Citi bank for your business loan.

Documents Required

  • Filled application form for personal loan
  • 2 Passport Size Photo
  • Valid identity proof (passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • Valid address proof (latest utility bill/ ration card/passport)
  • Valid proof of Age (Passport/ Photo PAN card/Voter’s identity card)
  • Financial documents: income tax return & profit & loss & balance sheet of last 2 years, last 6 months bank statement & business proof.

Eligibility Criteria

  • The minimum age of the applicant is 21 years in case of self-employed individuals, the minimum age for the salaried is 26 years.
  • The maximum age limit is 60 years in case of salaried applicant. The maximum age limit is 65 years for self-employed applicants
  • The applicant should have monthly income of at least 30,000.

ICICI Bank Business Loan Eligibility Criteria

ICICI bank is amongst the top five banks in India. The business loan from ICICI is tailored by keeping the requirement of the customers in mind. When it comes to corporate house ICICI bank has several options like finance for technology & innovation, working capital loan & term loan. For SME the options available are term credit, bank overdraft & export credit. So, there are wide varieties available covering all the required segments for business loan for corporate houses as well as for small business enterprises. One of the most unique features of ICICI business loan is they have a business loan available for women too. Not to forget customer support through customer care center round the clock.

Documents Required

  • Filled application form for personal loan
  • 2 Passport Size Photo
  • Valid identity proof (passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • Valid address proof (latest utility bill/ ration card/passport)
  • Financial documents: income tax return & profit & loss & balance sheet of last 2 years, last 6 months bank statement & business proof.
  • Current year performance and projected turnover on letterhead of the entity

Eligibility Criteria

  • The minimum age of the applicant should be of 25 years. The maximum age of the applicant should not exceed to 65 years
  • The business should be making profit for the last 1 year

Induslnd Bank Business Loan Eligibility Criteria

Well if you are the time starved customer & need the interest rate & quotation in less time than choose Induslnd bank. They have designed the loan for various purposes that a business house would be looking from. Working capital loan, export loan, term credit, trade loan, you name it & they have it. They do have the unsecured business loan which gives you the business loan without aby guarantor or security. The bank offers the business loan up to INR 1,500,000. The tenure of repayment is ranging from 1 year till 5 years. Instant check for eligibility of business loan. Minimum documentation and rapid processing are the key features of the bank.

Documents Required

  • Valid identity proof (passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • Valid address proof (latest utility bill/ ration card/passport)
  • Last 3 months salary slip, last 3 months bank statement & form 16 for salaried applicant, last 6 months bank statement & profit & loss & balance sheet of last 2 years for self-employed applicant.
  • Sole Proprietorship Declaration / Certified copy of Partnership Deed / Certified copy of MOA, AOA & Board resolution. In case of income derived from a partnership firm, latest 2 years partnership firm’s B/S, P&L a/c with all schedules certified by a CA for self-employed professionals.

Kotak Mahindra Bank Business Loan Eligibility Criteria

If you are looking for the bank for the purpose which no one else offers than Kotak Mahindra should be your choice? They offers the business loan starting from business banking solution, commercial vehicle Finanace, infrastructure finance. Kotak Mahindra offers the business loan up to INR 7,500,000. The rate of interest charged by bank is based on a benchmark, Prime Lending Rate (BPLR) which offered by Kotak Mahindra is 18.2555%per annum.

Documents Required

  • Filled application form for personal loan
  • 2 Passport Size Photo
  • Last 3 months salary slip, last 3 months bank statement & form 16 for salaried applicant, last 6 months bank statement & profit & loss & balance sheet of last 2 years for self-employed applicant.
  • Sole Proprietorship Declaration / Certified copy of Partnership Deed / Certified copy of MOA, AOA & Board resolution. In case of income derived from a partnership firm, latest 2 years partnership firm’s B/S, P&L a/c with all schedules certified by a CA for self-employed professionals.

Eligibility Criteria

  • Minimum age of the applicant is 23 years & maximum age of the applicant is 55 years.
  • In case of salaried applicant, the applicant must be working at MNCs, public companies or any private reputed company.
  • The monthly income of the salaried applicant should be greater than ₹ 25,000.
  • Self-employed individuals need to submit the Income tax return of last 5 years & should have the yearly turnover of ₹ 250,000.

Tata Capital Business Loan Eligibility Criteria

If you are in need of the financial institute which is very transparent than TATA capital is the way to go. The process of the TATA capital if very customer friendly & easy to go with. TATA capital is the institute by TATA & when it come to TATA the trust & integrity is something that comes very handy. Online application option is also available for the one who are not in a position to go to the institute whenever it is needed.

Documents Required

  • 2 Passport Size Photo
  • Valid identity proof (passport/ voter’s id/ driving license/ pan card/ aadhar card)
  • Valid address proof (latest utility bill/ ration card/passport)
  • Last 3 months salary slip, last 3 months bank statement & form 16 for salaried applicant, last 6 months bank statement & profit & loss & balance sheet of last 2 years for self-employed applicant.
  • Sole Proprietorship Declaration / Certified copy of Partnership Deed / Certified copy of MOA, AOA & Board resolution. In case of income derived from a partnership firm, latest 2 years partnership firm’s B/S, P&L a/c with all schedules certified by a CA for self-employed professionals.

Eligibility Criteria

  • Minimum age of the applicant is 25 years in case of salaried applicant. The maximum age limit for the self-employed is 65
  • The business should be profitable for last 3 years
  • The business should have the turnover of INR 4 million & the turnover should be increasing throughout the time.
  • The firm should have the Income tax return filled for at least ₹ 300,000.

HDFC Bank Business Loan Eligibility Criteria:

  • Rs. 4 million should be the minimum Turnover
  • Years in business should be minimum of 3 years in current firm and 5 years of overall experience
  • At least for the last 2 years the business must be profit making for the
  • Rs. 150,000 p.a. should be the minimum Annual Income (ITR)
  • Age limit of Applicant should be Min 21 years & Max. 65 years

Standard Chartered Bank Business Loan Eligibility Criteria:

  • Turnover: min Rs. 10 million and maximum Rs. 300 million.
  • Tenure of the Loan: 15 months to 36 months
  • Loan Amount Offered: min Rs. 500,000 to Rs. 50 million.
  • All Sole proprietors / proprietorship firms, Partnership firms, Pvt. Ltd. Companies, Closely held Public-limited companies, Professionals such as chartered accountants, doctors, architects, business consultants are eligible

Ing Vysya Business Loan Eligibility Criteria:

  • No minimum loan amount.
  • Maximum loan amount is Rs. 2.5 million.
  • No collateral required.

Fullerton India Business Loan Eligibility Criteria:

  • Age limit at least 27 years under the ‘Self-Employed Business Category’.
  • Relaxation up to 2 years is provided for non-professional.
  • Maximum age limit is 65 years.

RBL Bank Business Loan Eligibility Criteria:

  • Business Loans is offered for self-employed professionals, self-employed individuals, sole proprietorships, private limited companies and partnership firms with at least 3 years of profit business
  • Minimum age should be 23 years and maximum 65 years
  • At least 5 years of experience needed in the same-line of business. For self-employed professionals, post-qualification experience of minimum 4 years is required
  • Turnover should be Rs. 10 million for business and for Professionals gross receipts should be Rs. 6 million.
  • Applicant must own an office or residence in their name or should be jointly with family members

Ways to Improve the Eligibility for a Business Loan

  • Identify credit score reductions reason for the applicant and business, it could be because of credit card late payments or outstanding loan EMIs defaults, etc. Late payment and defaulting are the core factors for bad credit scores therefore it is essential that each individual must maintain good financial track record.
  • Forget the past which cannot be altered anymore, never default payments for any future transactions. Make all payments timely and keep adequate balance in the bank account for the ECS transactions.
  • Repeated rejection of the credit cards and any other outstanding loans will lead to drop in the credit rating score by rating agencies. If one bank rejects, there is least chance of others accepting the application.

Always look for a bank that offers quick service with less interest rate. A transparent bank will be more flexible in its eligibility criteria. All these eligibility criteria can be adjusted and overlooked by the bank manager, thus having a good long term relationship with the respective manager will be quite helpful.

If you are planning to take a business loan in the future, keep an eye on your transaction and credit score from today because the past and present is considered by banks to decide your ability to repay the loan amount in future. Make use of all the options available in the market- at the same time be vigilant and take loans only from reputed banks.