If you are looking for business loans, here are some of the most important eligibility requirements you should know about-
1. Type of BusinessA business loan is generally available for self-employed professionals (SEPs) like doctors, chartered accountants, architects, and company secretaries. Even self-employed non-professionals (SENPs) such as manufacturers, retailers, traders, service providers, and proprietors are eligible for such loans.
Business entities such as partnerships, private limited companies, and limited liability partnerships can also apply for SME loans.
2. Business TurnoverThe business turnover requirements vary considerably based on the lender and type of loan you select. For instance, a Line of Credit (LOC) loan requires the entity to have a minimum turnover of Rs. 5 lakhs to meet the business loan eligibility.
Similarly, an unsecured business loan will only be approved if your annual business turnover is above Rs. 20 lakhs.
3. Business ExperienceWhile there are now loans available for start-ups too, most of the business loans are only approved if the business owner has considerable experience of running the business.
If you are looking for small business loans, the lender would at least require you to be in the field of your business for at least 5 years and a minimum of 2-3 years experience of running the current business. You can also get a better business loan interest rate if you have vast experience of running your business.
4. Business ProfitabilityNo lender would like to give a loan to a loss-making business entity as this considerably increases the chances of loan default.
As a result, most top lenders only approve SME loans if the business has been making profits for at least 2-3 years.
5. Age and Credit Score of ApplicantOnly individuals above the age of 21 years are eligible to apply for a bank loan for business. At the time of loan maturity, the age of the applicant should not be more than 65 years.
The lender will also consider the credit score of the applicant for loan approval. In most cases, it is easier to get approved for the loan if your credit score is above 650-700.
Applying for an SME LoanIf you do meet the eligibility requirements listed above, look for a top lender to apply for the loan and take your business to newer heights.
Click here to know more and apply for a business loan
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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