Understanding the Eligibility Criteria for Business Loans
Before applying for a business loan, it’s important to understand the Eligibility for Business Loan that financial institutions consider. The criteria ensure that the borrower has the capacity and intent to repay the loan. Common eligibility requirements include the applicant being an Indian citizen aged between 21 to 65 years, with a minimum operational history of 1-2 years (depending on the lender). Additionally, most lenders require a minimum annual turnover—usually between ₹10 lakhs to ₹1 crore. Strong credit history (CIBIL score above 700) and clean financial records significantly improve your chances. For sole proprietors or partnership firms, the business must be duly registered. Some lenders also require the business to be profitable for the last two years and submit income tax returns and bank statements as proof. Startups may be asked to provide a robust business plan and projections. Lenders might have specific sector restrictions (e.g., no funding for speculative or real estate ventures). Meeting these requirements helps lenders minimize risk and ensures quick approval. However, fintech lenders often have flexible norms and assess alternative data like cash flows, GST returns, and customer ratings. Understanding these criteria helps applicants plan better and increases their chances of successful loan approval.