Business Loan Eligibility: Know The Few Standard Requirements to Check the Eligibility

If you are a business owner and wish to expand your business operations or if you aspire to start your venture, you can apply for a business loan to get the necessary capital. But, before you begin the loan application process, you must be aware of the lender-specific eligibility requirements to avoid rejection.While the eligibility criteria differ from lender to lender, most lenders have a few standard requirements, which are discussed below:

The business income is one of the critical things that the lenders consider while approving the loan. The income reflects your business stability and the ability to repay the borrowed amount. Depending on the type of business you own and the amount you apply for, the lender would require you to have a turnover of Rs. 15 lakhs to Rs. 1 crore per annum. So, while deciding the amount you wish to borrow, you must do a business loan eligibility check to see if your business income meets the lender’s requirement.

Your age at the time of applying for the loan plays a vital role in determining the amount you can borrow. Generally, most lenders allow young applicants to borrow a higher amount than the old aged who are in their 40s and 50s. This is because youngsters have longer working years and therefore, the lenders have better chances of recovering the full amount. Most lenders require the applicants to be minimum 21 years old at the time of applying for the loan and a maximum of 65 years at the time of maturity.

The number of years since the business is in operation is a critical essential factor that the lenders consider for approving the loan. If your business is in operation for three years or more, it will signify to the lender that you have a stable business, and you have higher chances of getting the loan approved. However, today, several lenders approve loans for businesses that are in operation for 12 months.

When it comes to applying for a loan, you cannot underestimate the importance of a credit score . It is paramount that you have a good credit score. Most lenders consider a score of 700+ as a benchmark score. If your credit score is less than 650, the chances are high that your business loan application will be rejected.No matter what purpose you apply business loan for, be it business expansion, paying employee salary, or buying new machinery, make sure that you choose the right lender that offers you the credit with favourable terms and conditions.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.