4 Factors that Affect Your Business Loan Eligibility
For a businessperson, it is always important to be in a position to get business loans without much difficulty. The criteria for business loan eligibility are set by lenders and work to determine whether or not you are eligible for a business loan. Your loan eligibility is the culmination of the different decisions you make over time. There are a variety of factors that may affect your eligibility for a business loan. In this post, we look at four such factors in detail.
Credit History
Credit history is one of the first things lenders check when determining an applicant's eligibility for a loan. The credit history or CIBIL score gives information about an applicant's past borrowing pattern. If you had availed of a loan before and repaid it on time, your CIBIL score will grow stronger. Any delays in repayment will bring your CIBIL score down. To be eligible for a business loan, you should typically have a score of 750 or above. Other factors may also affect your eligibility for a business loan despite having a good CIBIL score.
Business Performance
Every lender tries to provide money to successful businesses as it increases the chances of timely loan repayment. Your business's performance is evaluated through different means, including your balance sheet, bank statements, and tax returns. If your business' balance sheet shows insufficient annual revenues, it will negatively affect your eligibility for a business loan.
Collateral Offered
Most lenders will ask for collateral to reduce the risk associated with extending business loans. If you can offer collateral to avail of a business loan, it will significantly increase your eligibility to get one. It is noteworthy that financial platforms such as KreditBee offer collateral-free business loans for small business owners who cannot provide collateral.
Age of Your Business
The age of your business is also a significant factor that impacts your eligibility for a business loan. Generally, a business operating for less than two years is not easily granted business loans. Companies that have been in operation for a few years can produce documents such as ITRs, Bank statements, and balance sheets that vouch for their financial stability.
Wrap Up
Even if you don't fit all the criteria mentioned above, you can easily apply for an online business loan with KreditBee, one of the leading business loan companies. We offer collateral-free business loans with hassle-free documentation. All you need to do is download our online business loan app and complete your KYC, and you will have your loan amount transferred to your bank account in minimum time. To learn more about how you can access business loans and get answers to all your questions, email help@kreditbee.in.