Loans
Imagine you have worked tirelessly to build your business from the ground up. Your product is finally ready, your team is motivated, and you are excited about expanding. However, to turn your vision into reality, you need additional funding. That is where a business loan comes into play. But before you start envisioning how you will spend that capital, it is crucial to understand what lenders are looking for. This guide will walk you through the essential eligibility criteria for Business Loan, ensuring you are well-prepared when seeking financial support.
To qualify for the loan, the borrower must be at least 21 years old and not exceed 65 years of age at the time of the application. This age range ensures that borrowers are mature enough to manage the loan and have sufficient time to repay it.
Lenders evaluate business types to understand their stability, revenue generation, and industry risks, ensuring the loan aligns with the business's operational model and financial health. The loan is available to individuals, proprietors, partnership firms, and private or public companies. It also applies to retailers, traders, and anyone involved in service industries, manufacturing, or trading.
Depending on the bank, the business turnover amount would vary. Usually, a minimum annual turnover of ₹25 lakh would be required. However, if you apply for a Business Loan from HDFC Bank, the minimum turnover is ₹40 lakh. But with this increased turnover requirement comes higher funding.
Your business experience quantifies your loan eligibility criteria. You can find banks that accept a minimum of 2 years of the same business at the current business location but keep other qualifying criteria that remain stringent. But HDFC Bank offers a Business Growth Loan to those individuals who have been in the current business for at least 3 years with a total business experience of 5 years while assuring speedy disbursal.
Your business should have a stable and credible financial history with profits over the business's years of operation. Not only that, you will need to furnish your income and loss statement and balance sheet with all other Income Tax returns to quantify your ability to repay the loan and draw a picture of the business stability and profitability.
A CIBIL score is crucial for business loan approval as it reflects the borrower's creditworthiness and financial reliability. The CIBIL Score of your business, if it is a company or your score if you are a sole proprietor entrepreneur or self-employed professional, should be 700 and above to obtain a Business Loan quickly. A higher score indicates a strong history of timely repayments and responsible credit use while ultimately reducing the lender's risk.
A business plan outlines your business goals, strategies, financial projections, and market analysis. It is essential for loan approval as it demonstrates your business's viability and your strategy for success. To prepare one, start with an executive summary, then detail your business model, target market, competitive analysis, and marketing strategy. Include financial statements, such as profit and loss projections and cash flow forecasts.
Ownership of property is a key criterion for business loan eligibility. Banks look for proof that you own assets like a residence, office, shop, or warehouse. This ownership serves as collateral, reducing the bank's risk and enhancing your loan application's credibility. It reassures lenders of your financial stability and commitment to the business.
From meeting age requirements and demonstrating business experience to presenting a solid business plan and maintaining a good credit score, each criterion plays a significant role in the approval process. So, before you apply, take the time to evaluate these factors and ensure you meet the necessary criteria. This proactive approach will streamline your loan application process and position your business as a strong candidate for the financial support it needs.
Apply for your HDFC Bank Business Growth Loan today. To know more, click here.
Read more on the Business Loan document requirements here.