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Securing the right business loan is a game-changer when starting a business or expanding an existing one. These unsecured loans allow you to finance business needs ranging from procuring new inventory to paying employee salaries.<\/p>\n\n\n\n
However, the first step is to conduct a comprehensive business loan eligibility check before applying for a business loan.<\/p>\n\n\n\n
To be eligible for a business loan, your business must meet specific criteria set by the lender. Here we provide you with a list to check eligibility for business loans.<\/p>\n\n\n\n
Before a lender decides to approve your loan, they check your ability to repay it. They do this through a thorough business loan eligibility check. Understanding what factors are vital to your lender\u2019s decision can help you boost your chances of securing a business loan.<\/p>\n\n\n\n
This criterion of business loan eligibility checks if you are of age to enter into a loan agreement and repay it in the future. There is an upper and lower limit set on the age requirement. At the time of your loan application, you should be at least 21 years old and below 65 years at the time of your last loan instalment.<\/p>\n\n\n\n
To check eligibility for business loans with respect to this criterion, your lender would require you to submit a document as proof of age. This could be your Aadhar card, Voter ID, Birth Certificate, or PAN Card.<\/p>\n\n\n\n
The profitability of your business tells the lender if you generate enough revenue to support loan repayments. A business\u2019s financial strength is an essential consideration for lenders when checking the business loan eligibility for a new business.<\/p>\n\n\n\n
You will have to submit proof of income to prove that your business is profitable. This includes documents such as Income Tax Returns and Computation of Income, tax audit reports, profit-loss statements, and balance sheets. The documents submitted must pertain to the previous two fiscal years, and all documents must be verified, signed, and sealed by a registered chartered accountant.<\/p>\n\n\n\n
Next, to successfully clear a business loan eligibility check, you must be able to establish the stability of your business. Firstly, the longer a business has operated, the more stable lenders consider it to be, as this speaks to your business\u2019s longevity and resilience.<\/p>\n\n\n\n
Business stability is also a reflection of your business\u2019s ability to withstand dynamic market conditions. Lenders may judge this through various financial ratios that convey the health of a business.<\/p>\n\n\n\n
To determine if your business would qualify for an eligibility check, you can verify if your current ratio, debt to equity ratio etc are favourable. Lenders may also analyse efficiency ratios regarding turnover, inventory-to-asset ratios, and collection periods to check eligibility for business loans.<\/p>\n\n\n\n
Your bank balance is another indicator of your financial stability and business profitability that lenders use to conduct a business loan eligibility check. To determine if your bank balance makes you eligible for a business loan, verify if you\u2019ve had a healthy bank balance for at least six months.<\/p>\n\n\n\n
A healthy bank balance tells your lender that you can repay the loan and that your business has liquidity and a positive cash flow to support your operations.<\/p>\n\n\n\n
To facilitate a business loan eligibility check, you must submit bank statements for the last six months as part of the application process.<\/p>\n\n\n\n
Your credit score tells the lender if you are a trustworthy loan applicant. This crucial metric is a reflection of your creditworthiness and credit history. A higher credit score means a higher chance of securing a loan.<\/p>\n\n\n\n