What are the Eligibility Criteria for a Working Capital Loan?
Your business requires a regular cash flow for daily operations. However, at times there may be instances when the turnover is lower than your cash flow. In case such a situation arises, you can always fall back on the alternative of a Working Capital Loan. However, before you commence the loan application process, it is essential to checklist through Working Capital Loan eligibility. Through this article, we highlight the eligibility criteria for a Working Capital Loan.
Eligibility for Working Capital Finance:
Applicants Age: The borrower should be a minimum of 21 years of age when applying for the loan and should be no older than 65 years on maturity of the loan.
Nature of Business: Working Capital finance eligibility depends on the nature of the 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 that require constant cashflows to maintain their business's working capital.
Business Turnover: Depending on the chosen lending bank, the business turnover amount would vary. If you apply for a Working Capital Loan from HDFC Bank, the loan is broken into two segments that are annual turnover below Rs. 7.5 crore and an annual turnover above Rs. 7.5 crore.
Business Vintage: Another criterion for eligibility for Working Capital Loan is the business tenure. Your business should be operational for the past 2 years with your books in profit. However, it depends on bank to bank.
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.
Financial History: Your business should have a stable and credible financial history of profits over the business's years of operation.
Source of Income: Another Working Capital finance eligibility is your source of income for your business. Every earning for your business is qualified under your income source, whether 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 criteria of eligibility for Working Capital Loan is the business's financial capability or the promoter to repay the loan. Your financial efficiency of the business, your profit and loss statement, balance sheet with all other Income Tax returns quantify your ability to repay the loan and narrate a picture of the business stability and profitability.
Creditworthiness: the creditworthiness of the business and promoter is a vital Working Capital Finance eligibility criteria. There should be no loan defaults in the past.
Ownership or Collateral Worthiness: An essential criterion of eligibility for Working Capital Loan that banks consider is ownership of a property that could be a residence, office, shop, godown.
Once you are convinced of the Working Capital Loan eligibility criteria, it is a simple application process, to begin with for the loan. Apply for your Working Capital today.
*Terms and conditions apply. Working Capital Loan or Business Growth Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.