Running a small business is deeply satisfying – it’s the path to pursuing one’s dreams and passions. However, owning a business isn’t a piece of cake. There are plenty of challenges and hurdles to cross. One of the biggest challenges facing all small business owners is the lack of access to funds to meet daily operational expenses, for business expansions and other needs. This is where business loans come into the picture. 

Small business owners, enterprises, and entrepreneurs can apply for a business loan to meet various business expenses. However, to get a small business loan, business owners have to submit multiple documents, including ITR (income tax returns).

This presents another challenge to business owners, especially those who have started their business recently and do not have ITR documents. If you’re looking to apply for a business loan without ITR, no worries. We’ve got you covered. Here, in this guide, we show you how you can apply for small business loans without submitting ITR. 

How to apply for small business loans without ITR? 

First-time business owners are not likely to have submitted ITR, especially within a few months of launching the business. That does not mean they are ineligible for business loans. Understanding the situation, several banks, NBFCs, and digital lenders offer business loans without ITR at competitive interest rates and flexible repayment options.

The eligibility for business loans without ITR is maintaining a good credit score. All lenders check your credit history and credit score before sanctioning any loan. Let’s take a closer look at the eligibility conditions. 

Eligibility Requirements for Business Loans without ITR 

  • Who can apply?

    • Individuals – proprietors, traders, merchants, retailers, manufacturers, etc. 

    • Businesses – Partnership concerns, LLPs (Limited Liability Partnerships), Sole proprietorships, co-operative societies, trusts, NGOs, etc. 

    • Startups, self-employed professionals, and first-time business owners are also eligible.

  • Age 

    • Minimum – 18 years and above at the time of loan application 

    • Maximum – 65 years and below at the time of loan maturity 

  • Loan Amount – Ranges from Rs. 10,000 to Rs. 10 crores depending on the nature of the business, guarantor, credit score, applicant's profile, and other criteria.  

  • Co-applicant – Yes, permitted. However, note that it’s optional and not compulsory. 

  • Business Turnover – This is at the discretion of the lender and varies from one financial institution to another. 

  • Collateral – Generally, not required for term loans. However, you may have to submit a guarantee to avail letter of credit, bill discounting, etc.  

Documents Required for Business Loans without ITR

  • Duly filled application form

  • Detailed business plan 

  • Recent passport size photographs 

  • Identity proof of the applicant – voter’s ID, driving license, Aadhaar, passport, etc. 

  • Address proof of the applicant – passport, bank statement, electricity bill, rental agreement, etc. 

  • Business existence proof and address proof for the business 

  • PAN Card of the company (or individual)

  • MoA (Memorandum of Association) / Partnership Deed / Incorporation Certificate 

  • The rental agreement for the business

  • Current bank account statement for the last few months 

*Note that the list of documents required will vary from one lender to another. You may have to furnish additional documents, as required by your lender. 

Few Points to Keep in Mind, while Applying for Business Loans without ITR 

  • Approach private banks and NBFCs 

Generally, it's challenging to qualify for a small business loan without ITR, especially from public sector banks. To improve your chances of securing the loan, you can approach private banks and NBFCs. However, note that the rate of interest offered by private banks and NBFCs is higher than that of public-sector banks. 

  • Go for a loan against property

An alternative for business loans without ITR is to apply for a loan against property. Since this is a secured loan, the eligibility criteria are more relaxed, and you can obtain the loan even without submitting ITR documents.

  • Opt for Government Endorsed Schemes 

The government of India has introduced various loan schemes to help first-time business owners and budding entrepreneurs. Some of these loan schemes include:

    • Mudra Loan under the PMMY (Pradhan Mantri Mudra Yojana) 

    • PMEGP (Prime Minister’s Employment Generation Scheme)

    • Stand-Up India 

    • PSB Loans in 59 minutes 

    • SMILE (SIDBI Make in India Soft Loan Fund for MSMEs) 

    • NSIC (National Small Industries Corporation) Subsidy 

All these loans are aimed at helping small business owners. They can be easily availed without security, collateral, or ITR documents. Make sure to visit the official website of these loan schemes for further details.

  • Work on Improving your Credit Score 

Credit score plays a crucial role in helping your business loan get sanctioned. Even if you do not have the required ITR documents, having a high credit score can tip the scales in your favour. So, make sure to maintain good credit. If your scores are low, try out ways to improve it before approaching a lender.

Where to avail business loans without ITR? 

As mentioned above, you can apply for business loans without ITR at traditional banks and non-banking financial institutions. Here are a few places where you can avail easy business loans without providing ITR documents.

1.Bajaj Finserv 

As one of the leading NBFCs in the country, Bajaj Finserv grants business loans to new startups and small businesses, without asking for any ITR from the borrowers. The loan quantum ranges from Rs. 1 lakh to Rs. 15 lakhs, depending on the borrower’s profile and the business requirements. 

Salient Features:

  • The rate of interest ranges from 19 to 25% per annum.

  • Repayment tenure ranges from 12 to 48 months. 

  • No need to provide ITR, if you’re submitting current bank statements. 

  • The business must have been in existence for at least three years.

  • Businesses must be either in trading, manufacturing, or service.

  • The applicant must apply from the city of residence or the city where the business is operated. 

 

2.IDFC First Bank 

IDFC First Bank offers business loans to small businesses without asking for the ITR. The quantum of loan available ranges from Rs. 1 lakh to Rs. 9 lakhs.

Salient Features:

  • The rate of interest ranges from 19 to 24% per annum.

  • Repayment tenure ranges from 12 to 48 months. 

  • Loans are available even for new businesses and startups.

  • Offers loans only to companies in manufacturing and trading, but not in service.

  • The applicant must apply from the city of residence or the city where the business is operated. 

 

3.HDFC Bank 

HDFC is one of the leading commercial banks in India that offers business loans for small businesses and startups that do not have ITR documents. The quantum of loan ranges from Rs. 1 lakh to Rs. 20 lakh, depending on business requirements. 

Salient Features:

  • Applicants have to provide a 12-month bank statement (current account or OD account). 

  • The rate of interest ranges from 18 to 21% per annum.

  • Repayment tenure ranges from 12 to 36 months. 

  • The business must be in operation for at least 36 months. 

  • The loan is available to all businesses in the manufacturing, trading, and service sectors.

  • The applicant must apply from the city of residence or the city where the company is operated.

 

4.TATA Capital Business Loan 

TATA Capital is one of the most well-known and trusted NBFC in India that offers business loans for startups without ITR. The loan quantum ranges from Rs. 1 lakh to Rs. 20 lakhs. 

Salient Features:

  • Applicants have to provide a 12-month bank statement (current account or OD account). 

  • The rate of interest ranges from 19 to 22% per annum.

  • Repayment tenure ranges from 12 to 36 months. 

  • The business must be in operation for at least 36 months. 

  • The loan is available to all businesses in the manufacturing, trading, and service sectors.

  • The applicant must apply from the city of residence or the city where the company is operated.

EndNote 

Compare, Do your Research to Find the Best Option 

Today, several financial institutions, including traditional banks and other lenders, offer business loans without ITR. However, the terms and conditions vary vastly from one lender to another. So, make sure to compare interest rates, foreclosure charges, repayment tenure, and other features before finalizing the deal.