A business loan is one of the best credit solutions for any business. You can get a loan sanctioned in a matter of a few days. The repayment schedule is flexible and allows you to settle the loan without any hassles. It is also a safe form of credit with no need for collateral. The entire process is smooth and straightforward and can be used by all kinds of businesses, big and small. However, it is important to follow the rules of business loan eligibility to ensure that your loan does not get rejected.
Read on to know how loan providers calculate the business loan eligibility of an applicant.
Most loan providers take into consideration the following factors while calculating your eligibility:
- Your age: Your age plays an important role in your business loan eligibility. Candidates who are too young or old may find it hard to find a business loan sometimes, as their age affects their repayment capacity and reliability. Typically, you can apply for a loan between the ages of 25 and 65 years.
- Business type: The nature of your business impacts its earning capability and hence is often scrutinized by lenders. The more viable the business idea and type, the higher are the chances of getting the loan.
- CIBIL score: The credit score is crucial for every type of loan. A low credit score reflects your inability to pay the debt on time and points towards mismanagement of finances on your part. So, make sure to keep your score high before you apply.
- Business turnover: A high turnover instills confidence in the lender that you will be able to pay back the business loan without any troubles. A low turnover, on the other hand, can hint towards difficulty in settling your loan.
- Financial history: If you have faltered in paying back a loan in the past, the lender will likely be wary of offering you another loan. Similarly, if your business has suffered from financial setbacks, losses, or poor turnovers before, the loan provider might be hesitant about extending another loan.
How can you improve your chances of getting a business loan?
Make sure that you pay your taxes on time and follow the schedule of the equated monthly installments (EMIs) on your existing loans. Keeping a high credit score, submitting all relevant documents as requested by the lender, and having a solid business plan can ensure that you get a loan with minimal hassles. You can also opt for a longer repayment schedule so you have enough time to pay back the loan and there are no lapses in between.
A business loan can help your company in so many ways. If you want to get a business loan, use a business loan EMI calculator to pick a loan tenure as per your suitability and go ahead and apply for a loan online.