InvestorQ : What is the eligibility criteria for a business loan?
shivangi Arora made post

What is the eligibility criteria for a business loan?

shivangi Arora answered.
3 years ago

It is important that a borrower meets the eligibility criteria of a bank/non-banking finance company (NBFC) before applying for its loan.

Although the specific criteria may differ from one lender to another, most lenders have similar eligibility criteria. Business or MSME or SME loans can be either secured or unsecured loans.

If a loan is a secured business loans, then the value of the asset used as collateral determines the features of the loan you will avail of. Meeting the necessary eligibility requirements is important in order to receive a loan easily. Thus, you must not only study the eligibility criteria of your potential lender, but you must also do everything in your capacity to ensure you meet the eligibility criteria.

A few individuals who are eligible for business loans are:

- Self-employed businessmen/professionals

- Limited or private limited firm

- Manufacturer, retailer or service provider

Criteria required to meet to avail business loan:

- The business owner/professional must be aged between 21 years and 65 years

- The business should have been operational for at least three years

- The business turnover must be at least Rs. 50 lakhs per annum with minimum Rs. 2 lakh of profit. Do note, however, that loans of higher amounts may also be availed as per the lender’s discretion.

- The business owner/business must submit the last three years of income tax return (ITR) statements.

- A business partner can be a co-applicant in the business loan application. In fact, this is recommended as it would increase the probability of getting a loan of higher amount with a longer tenure and interest rate.