Business Loan

Business Loan

When a financial institution provides a loan based on a borrower’s credit history and without any collateral, it is called an unsecured business loan. 

Many business owners borrow unsecured business loans to finance their dreams. However, banks and other financial institutions generally lend it to people with good businesses and high credit worthiness.

Business loan eligibility criteria

Like banks, NBFCs have their own eligibility criteria when offering business loans. Though the eligibility requirements are usually similar (with minor differences) there can be specific requirements or case-wise requirements for different NBFCs. Let’s understand the basic eligibility requirements for NBFC business loans:

  • Type of business– Usually all entities including sole proprietorship, LLPs, start-ups, partnerships, large enterprises etc. (this does not include businesses operating in restricted industries or are blacklisted)
  • Business vintage– Minimum 6 – 36 months (this varies between lenders)
  • ITR filing – Minimum for 1 year with turnover details duly audited by CA
  • Business turnover – ₹50,000+ at the time of application (quarterly or half-yearly)
  • Business location – Office address should not be in a negative location
  • Age –Applicant’s age should be within 21 – 65 years at the time of loan maturity
  • Credit score –650+ (preferably 750+ if seeking collateral free finance)

Documents required for unsecured business loan NBFC

When taking an unsecured business loan, the NBFC will request for some documents. These documents are broadly related to applicant KYC, business details and financials, CIBIL/credit score etc. to check the creditworthiness of the borrower/business and reduce the NBFCs risks of lending.

NBFC unsecured business loan documents required:

  • Duly filled in application form and 2 passport sized photos
  • KYC documents including Identity and address proof – E.g., Aadhaar card, voter’s ID, passport
  • Business and individual PAN card
  • Business ownership proof and business address proof
  • Proof of business registration and GST registration
  • 6+ months bank statements
  • CA audited balance sheet and P/L sheets of previous year
  • ITR for last 2-3 years