What are the eligibility criteria for a business loan
A Business Loan comes in handy for those individuals or business owners or self-employed professionals who require additional funds to meet their day to day working of the business, expansion purpose via inventory or one-time purchase of equipment and machinery. Whatever the reason may be a Business Loan is your one-stop-shop for additional finances for your business. However, there are a handful of stipulations to be considered before you apply for a Business Loan. This article takes you through the Business Loan eligibility criteria to be contemplated before you begin your loan application. Let's take a look at what are the criteria's.
Business Loan Eligibility Criteria:
Depending on your type of business, its size, its nature and financial requirement. We have a financial solution that will fit your every need. The following is the small Business Loan eligibility criteria:
Applicants Age: The borrower should be a minimum of 21 years of age and should be no older than 65 years when applying for the loan.
Nature of Business: It depends on the nature of your business. Individuals, proprietors, partnership firms, private or public companies, retailers, traders or any other business owner engaged in the business of service, manufacturing products, or trading sectors.
Business Turnover: Depending on the bank, the business turnover amount would vary. Usually, a minimum annual turnover of Rs. 25 lacs would be required. However, for instance, if you apply for a Business Loan from HDFC Bank, the minimum turnover is Rs. 40 lacs.
- Business Experience: Your business experience quantifies your loan eligibility criteria. Most banks accept a minimum of 2 years of the same business at the current business location in most cases. However, it depends on the bank, for instance, HDFC BANK offers a Business Growth Loan to those individuals who have been in the current business for a minimum of 3 years with a total business experience of 5 years.
- Financial History: Your business should have a stable and credible financial history with profits over the business's years of operation.
- Source of Income: Another eligibility criteria for MSME Loan is your source of income for your business. Every earning for your business is qualified under your income source, whether it may be from the business income or investment income.
- CIBIL Score: The CIBIL Score of your business if it's a company or your score if you are a sole proprietor or entrepreneur or self-employed professional should be 700 and above to obtain a Business Loan quickly.
- Financial Capability: A critical Business Loan eligibility criteria is your financial capability to repay your loan. Your financial efficiency of the business, your income and loss statement, balance sheet with all other Income Tax returns quantify your ability to repay the loan and draw a picture of the business stability and profitability.
- Creditworthiness: the creditworthiness of the business and promoter are vital for the eligibility criteria for the Loan. There should be no loan defaults in the past.
- Business Plan: To apply for a loan; other criteria considered is a detailed business plan.
- Ownership: An essential Business Loan eligibility criteria banks consider is ownership of a property that could be a residence, office, shop, godown.
With an extensive list to understand the Business Loan eligibility criteria before applying, your loan application process will be seamless and hassle-free. Apply for your HDFC Bank Business Growth Loan today. To know more, click here.
Read more on the Business Loan document requirements here.
*Terms and conditions apply. Business Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.