Personal loans are taken for a variety of reasons and one of them can be to invest in your own business or to meet any shortfalls you might be facing. Since a personal loan is taken without any collateral, it is easy and convenient, and you can get instant funding without much hassle.

For salaried individuals, the loan is given based on their job stability, income report, credit score amongst other factors whereas for the self-employed, the process is slightly different.

If you’re a self-employed individual looking to grow your business further and need money, you’re supposed to submit the following documents –
  • Income Tax Returns
  • Audited Financial Statements of your business
  • 6 months bank statement
  • Gross Annual Income Report
  • VAT returns and GST registration number
What are the eligibility criteria for a self-employed person?

Let’s look at the eligibility criteria of a self-employed person who is looking to take a personal loan to invest in the business –
  1. Income Tax Returns: When you apply for a personal loan it is mandatory for you to have filed your tax returns for a minimum of 2-3 years. Banks and other financial institutions will assess your repayment capacity with the help of these returns.
  2. Gross Annual Receipts: A gross annual receipt is an income statement which contains the total income earned without subtracting the expenses during the annual accounting period. In order to be eligible for a personal loan, your GAR should be anywhere between 5-10 lakhs.
  3. Credit History: Your credit score will be taken into consideration before your loan is approved. A good credit score and a solid payment history will work in your favour.
  4. Age: The minimum age is 25 years and the maximum age is 65 years.
  5. Banking stability: A 6-month bank statement will also be looked into and should be submitted as proof for your loan to get approved. Your average account balance and income stability are the two key factors which will be taken into consideration.

If you’re looking to apply for a personal loan for your business, ensure that you have all your documents in order and that your statements reflect stable income from your business. It is easy to get a personal loan as compared to any other loan as it does not involve any collateral. As long as you have a good credit score and all the documents in place, you are good to go.

Learn more about your Personal Loan Eligibility here.

DISCLAIMER

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.

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