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How to Improve Business Loan Eligibility?

Build a good
CIBIL score

Try to manage a CIBIL score of more than 750.

Do away with
past debts

Pay off any existing liabilities, loans, or pending credit card bills, on time. Try to maintain a spotless repayment history by avoiding defaulting on payments.

Try not to avail various
loans simultaneously

Always apply for a business loan that is best suited to your financial requirements. Filing multiple loan applications affects your creditworthiness.

Opt for longer loan
repayment tenure

Choose a longer loan tenure. It will enable you to repay comfortably over an extended period. Higher repayment tenure also reduces your EMI amounts.

When Should You Choose a Business Loan?

01

Expansion

Continuous market performance is characterised by increasing revenue and earnings. When it comes to growth, company loans will conveniently fund short-term expenditures as well as multiple intermittent expenses. As a result, the operating finances will be preserved as you increase revenue by growth.

02

Inventory

Finished products, raw materials, merchandise, and other inventory keep the company running. A functioning business requires significant resources to expand and a well-stocked inventory to meet ongoing market demand. A business loan can help with inventory management plans to ensuring that inventory costs are offset without affecting your revenue.

03

Cash Flow

Growing, developing, or failing firms must cultivate a consistent flow of cash. Inconsistent cash flow will have an effect on the day-to-day expenses such as electricity, leases, employees, and inventory. Taking out a bank loan will help you handle your costs and keep your business running through difficult periods. Maintaining a certain amount of working capital assists you in running your business during times of need or during the off-season.

04

Equipment

Workforces are worthless until they are supported with cutting-edge technology. Purchases to repair, rebuild, and update different types of machinery occur often, and the best-quality equipment is needed. In such cases, business loans are perfect because they provide a swift infusion of funds, ensuring that the company does not lose as a result of broken or obsolete machinery.

DOCUMENTS REQUIRED FOR BUSINESS LOAN

Photo Identity Proof

Business Proof

A signed copy of your partnership arrangement or sole proprietorship statement, as well as a copy of your ownership records, Establishment/Trade License/Sales Tax Certificate.

Income Proof

ITRs and computations for the previous two years, balance sheet (audited by a certified CA), and profit/loss statement for the previous two years.

Bank Statements

A backup of the company's approved checking accounts for personal deposits, current account statements, and the company's current account for the previous six months.

KYC Documents

A copy of the PAN card, Aadhar card, driving licence, Certificate of Incorporation, and Memorandum and Articles of Association.

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What is business loan
eligibility?

Business loan eligibility includes specific requirements such as CIBIL ratings, maturity, business turnover, and more that applicants must meet in order to obtain business financing.

Business Loan Eligibility Criteria:
  • → Age should be between 25 to 55 years
  • → CIBIL score must be 700 or more
  • → Candidate should own a business at least profitable for three successive financial years
  • → The business turnover must display an upward trend
  • → Your balance sheet be audited by a registered Chartered Accountant (CA)

FAQ's

Before extending a business loan, lenders would want to ensure that the company is profitable and growing, and that it provides you with a consistent stream of profits. A positive cash inflow gives lenders the idea that you have a high repayment potential, thus rendering you a low-risk borrower. Your business loan application will be denied if you do not have a consistent source of income.
To meet business loan eligibility, an applicants age must be between 25 - 55 years
Since corporate owners do not receive a regular income, their debt eligibility is determined by the turnover of their company over the past three fiscal years.
The following business loan documents are required at the time of application -
  • Duly filled business loan application form with two passport-sized photographs.
  • Copy of Photo Identity Proof documents : Pan Card, Voter ID/Passport/Driving License/Aadhaar Card.
  • Copy of certified bank statements for the last six months
  • Industry Proof Papers : Trade License/Establishment/Sales Tax Certificate, Declaration of Sole Proprietorship or registered copy of the Partnership Deed, Income Tax Returns (ITR) with calculation for the previous two years, business ownership documents, P/L Profit/Loss report and balance sheet for the previous two years
To avail a business loan, you must meet the following eligibility criteria:
  • You must be between 25 to 55 years of age
  • You must have a CIBIL score of 700 or above
  • You should own a business that must be profitable for three consecutive financial years
  • Your business turnover must show an upward trend
  • Your balance sheet must be audited by a registered Chartered Accountant