Eligibility Criteria for Business Loans

Eligible Entities

Self-employed individuals, Proprietors, Private Ltd. Co. and Partnership Firms (Manufacturing, Trading or Services)

Age Criteria

Min. 18 years and Max. 65 years

Age of the Business

Minimum 2 years, making a profit

Annual Turnover

Minimum Rs.25 lakhs

Credit Score

700 and above

The above is a common list of criteria required to apply for a business loan. The lender will further look into these factors and scrutinize them before approving your loan. This is how they usually work: 

Credit score: Your credit score is a reflection of your credibility. It is important for banks to be confident in the borrower's ability to repay the loan. A high credit score ensures this.

Financial stability: In order to accept the loan, the company's financial stability is essential. Banks will investigate the firm's sales and profit aspects. This can be obtained from your business background and the tenure of the company.

Profitability and long-term viability of the enterprise: Another important condition is that the company should generate a significant profit. Banks are unable to lend money to a firm that isn't doing well. To decide this factor, the bank will request a profit and loss statement for the previous two years.

Current relationship with the bank: The current relationship with the bank is also important. The bank is attempting to investigate all bank relationships with the firm. Before processing the loan, the bank checks the account's cash balance and deposits, any past loans you had with the bank, and also your repayment background.

Collateral: Although certain government schemes offer low-risk business loans with no collateral, the borrower should put up some kind of collateral in order to obtain acceptable credit terms and interest rates.