It is important to check your business loan eligibility criteria before making a business loan application. Banks and lenders have certain business loan eligibility criteria and all applicants have to meet these before a business loan is sanctioned. The eligibility criteria differ across lenders and usually depend on the applicant’s profile.
What are the eligibility criteria for business loans?
The table below shows some of the commonly used criteria for business loan applications:
|
Age criteria |
Minimum 18 years |
|
Eligible entities |
Individuals, SMEs, MSMEs, Sole Proprietorship, Partnership firms, public and private limited companies, limited liability partnerships, retailers, traders, manufacturers engaged in only services, trading, and manufacturing sectors |
|
Age of business |
Minimum 1 year |
|
Business experience |
Minimum 1 year |
|
Annual turnover |
Minimum Rs. 12 lakhs |
|
Credit score |
750 or above |
|
Nationality |
Indian citizens |
What factors determine business loan eligibility?
Some of the key factors that determine business loan eligibility are:
- Applicant’s age
- Nature of business
- Applicant’s financial history, source of income & credit score
- Business turnover and vintage
- Applicant’s repayment capability & creditworthiness
- Business stability or profitability
- Loan defaults, if applicable
How to improve business loan eligibility?
In case a business loan application is rejected, here is how one can improve the eligibility:
- Error-free documentation
- Ensure continued business profitability
- Regular tax payments
- Assure future financial security
Business loans can aid business owners, startups, self-employed individuals, entrepreneurs, and also MSMEs who require additional funds to meet their capital requirements. However, there are many business loan eligibility criteria set by the respective banks and lenders that business loan applicants must qualify for a successful application.