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What are The Challenges Associated with Business Loan Eligibility in India?

Business Loan Eligibility in India : What all you should know?


Highlights

Business Loan Eligibility in India

What do you need?

How your Experience makes your eligible for Business Loan

Owning and operating a business can be a great source of joy and pride provided, of course, you enjoy the work you engage in. Successful businesses have the potential to bring in great returns, operate with efficiency and be in sync with market demands. Achieving these levels of success, however, requires businesses to have the money needed to optimize their efficiency and allow for the most viable business model to be incorporated. Not all business owners can afford to spend money on each of these avenues. At times, they might operate at inefficient levels of productivity owing to a lack of funds that prevents them from enhancing their business operations. Here is all you need to know about Business Loan Eligibility in India.

With a business loan online, however, these financial hurdles are mitigated, and it is possible for businesses to operate with greater ease and efficiency. Being eligible for a business loan, however, has a number of hurdles that one must pass.

Business Loan Eligibility in India

Defining a Business Loan

A business loan is a form of an unsecured loan that provides businesses and enterprises with financing options that allow them to meet their requirements. These requirements pertain to the following avenues.

  • Employing additional staff

  • Paying off any existing debt

  • Buying new machinery and equipment

  • Expanding operations to new locations

Today, business loans are available at competitive interest rates and are provided by a number of banks along with non-banking financial companies.

Read More: How Low Rates Loan will Affect the Indian Economy

Qualifying for a Business Loan

In order to be able to avail of a business loan in India today, your business is required to fall under one of the following categories listed below.

  • Closely held limited companies

  • Manufacturing company or operations

  • Partnership firms

  • Private limited companies

  • Retail units

  • Self-employed individuals and professionals

  • Sole proprietorship firms

  • Trading company or operations

Documents Needed to Apply for a Business Loan

Those seeking to apply for a business loan must bring with them the following documents.

  • Authenticated copy of partnership deed or sole proprietorship declaration

  • Bank statements (for the past 6 months)

  • Certified copy of memorandum and articles of association

  • ITR form – This along with certified copies pertaining to your income computation, balance sheets and profit and loss statements for the past two years.

  • PAN card

  • Proof of Address – Voter ID, passport, driving license, Aadhar card or utility bills will suffice.

  • Proof of Identity – Voter ID, passport, driving license or Aadhar card will suffice.

Read more: 3 Simple Ways To Keep Up With Your New Year’s Resolution Without Failing

What Makes you Eligible for a Business Loan?

To know whether you are eligible for business

Business Loan
Business Loan Eligibility in India

loan or not read the below listed factors that are taken into account while determining business loan eligibility:

1. Self-employed

  • To avail of such a loan, you must be self-employed.

  • Self-employed individuals hold professions such as doctors and chartered accountants. In the case of self-employed non-professionals, roles held include those of traders and manufacturers.

1. Age

Individuals seeking such a loan should fall in the age range of 25 to 65 years of age.

3. Experience

Those seeking to avail of such loans must have at least 3 years of experience in the current business they are involved with and have at least 5 years of business experience from a broader perspective.

4. Income

Business owners must avail of an annual income (ITR) that is at the very least worth INR 1.5 Lakhs each annum.

5. Businesses Considered

Partnerships, private limited companies, and limited liability partnerships can each apply for a business loan.

Conclusion

To learn more about business loan eligibility and determine whether your business makes the cut, always read the fine print listed on the loans that catch your eye.

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