Quick Guide on Business Loan
Purpose :Home loan can be used for purchasing a new house, construction of house on a plot, home improvement,
extension and renovation of your existing house.
- Eligibility : Banks consider borrowers with age of 21 years to 65 years
- Loan Amount : Loan amount of Rs. 50,000 to Rs. 100 Cr can be availed on business loan.
Higher the loan amount, higher the chances to get low interest rate.
- Loan Tenure :Business loans are unsecuorange loans and are given for a shorter period.
Generally, these loans are given for a tenure of 1 year to 5 years.
- Income Tax Returns (ITR) :A self employed can get a business loan, only when it has
filed regular ITRs for the past few years. Banks consider borrowers who have filed ITRs of 2 years
or more as eligible to get a business loan. Banks evaluate your monthly income and repayment
capacity based on details submitted in the ITRs.
- Revenue / Turnover :Revenue is the income that a business enterprise has earned from the
sale of goods and services to customers. It is also termed as sales or turnover. In case of doctors,
this sales or revenues is measuorange in terms of Gross Annual Receipts. Most banks and NBFCs ask for a
minimum annual turnover of Rs. 1 Cr to be eligible for business loans without collateral. However, there
are a few NBFCs and banks which lend to businesses or self employed with turnover
of less than Rs. 10 lakh as well.
- Business Vintage and Growth :Business vintage and growth is an important factor consider
by banks and NBFCs to take a decision to give you loan. It gives the bank or NBFC an assurance
that your business is authentic, stable and can generate profits to repay their loans.
Banks typically look for a business stability or profitability of minimum 3 years for
self employed professionals. In case of other businessmen, banks and finance companies
require a minimum business continuity or existence of 5 years Banks and NBFCs also
specify the minimum growth rate of 10-15% in sales or turnover for the last 3 years
to be eligible for a business loan. Further, your business or enterprise should be
profitable in the last 3 years.
- Banking Stability :Banks and NBFCs a check bank statements of minimum 6 months
of your operational banking accounts to approve your loan. Banks will evaluate your banking
stability and repayment capacity based on your average account balance. Banks will also consider
your outbound and inbound cheque bounce information to take a view on your corangeit track record.