The Ultimate Guide To Eligibility Criteria For Business Loan
Now we know that we can take business loan through many sources like government schemes, bank loans and special schemes for women entrepreneurs. Let us now know what is the eligibility criteria for taking loans under these schemes.
Government schemes under loan eligibility
Eligibility for Credit Guarantee Scheme
This scheme is applicable to MSMEs of both types, new and existing, that deal in manufacturing or services activities.
Eligibility for Mudra Loan Scheme
The non-corporate small business sector (NCSB) including sole proprietorships/partnerships in rural and urban areas is entitled to apply for loans. Some examples of NCSB are like
Small manufacturing units
Service Sector Units
Food processor etc.
All types of manufacturing, trading and service sector units can get loans under this sector.
Key Eligibility of Stand-up India Scheme
Enterprises that are engaged in manufacturing, trading services have the power to take loans under the ISSU scheme. For non-individual companies, at least 51% of the equity and majority of the equity must be in the hands of SC/ST or entrepreneurs. The borrower should not default on any payment with any bank or financial institution.
Coir Udyami Yojana Scheme Eligibility
All MSME coconut fiber start-up companies registered with the Coconut Shell Commission under the Coconut Shell Industry (Registration) Regulations 2008 are eligible to obtain loans under the scheme. The eligibility criteria is-
1. All individuals, companies, self-help groups, NGOs, institutions registered under the ISS scheme shall be under the Provide Assistance for Societies Registration Act, 1860. Business loans are also provided to production cooperative societies, joint liability groups, and charitable trusts.
2. Startups which already have government subsidy or have availed ISS facility under which government scheme are not eligible to take a business loan under this scheme.
2. Bank Business Loan Eligibility
First of all, let us know which parties are eligible for taking a business loan from the bank–
a) Self-employed businessmen and professionals
b) Limited or Private Limited Firm
c) Manufacture, retailer or service provider
Now let’s know what is the eligibility criteria for taking a business loan from the bank-
Applicant must be an age 21–65 Years old.
The business should be in existence for at least 3 years.
The company is said to be profitable in the past two years
The turnover of the business should be 40-50 lakhs per year.
Minimum profit should be up to 1-2 lakhs.
3. Eligibility for Women Entrepreneur Scheme
St. Kalyani Scheme
The woman above 18 years
Tree power package plan
Eligibility: Women entrepreneur should have 51% or more ownership in the business venture.
Dena power plan
Eligibility: The woman entrepreneur should have 50% or more ownership in the business venture.
Eligibility: The age of the woman entrepreneur should be between 18-55 and the maximum income limit is 1.5 lakhs.
Key Documents of Business Loan
We need many documents to take a business loan, but which document you need, depends on where you are taking the loan.
If you are taking government schemes through a business loan then you will need niche documents for every scheme but we will tell you some documents which are common to all schemes like-
GST identification number
Income tax details which have been paid in the last 3-5 years.
Last 6 months of bank statement
Proper information about the type of loan you want to take.
List of Directors or Partners of the Company/Partnership Firm
E-KYC – All the documents that the applicant will need at the time of e-KYC such as Personal ID, Address Proof, Premises Proof, Aadhar Number, etc.
2. If you take a business loan from the bank, then you will need some documents like-
Income tax return for the past 3-years (ITR).
certificate of practice
Recent/latest photograph of the applicant
Identity Proof like Aadhar Card, Voter ID Card, PAN Card, Company Registration Certificate, etc.
Other documents like Sole Proprietary Declaration, Certified copy of Partnership Deed, Certified copy of Memorandum of Association and Articles of Association, etc.
3. If you are a woman entrepreneur and you are women
If you want to take loan through government schemes made for entrepreneurs, then you will need some documents like-
Aadhar ID card, driving license, voter card, passport,
Address Proof- Ration Card, Aadhar Card, and Passport
Residence Proof- Utility Bill, Landline Bill, Water Bill
Confirmation of bank statements for the past two years
Financial Documents- Income Tax Return (Last 2 Years), Profit and Loss Statement for last 2 Years ca. Audited balance sheet.
Business Ownership- Partnership Deed for Partnership Business, Sole Proprietor Deed if you are Sole Proprietor, a certified copy of Articles of Association, Memorandum of Association
How to Apply for Business Loan
If you are applying for a business loan from the bank, then you can apply for this loan through both online and offline modes-
If your financial lender ie bank offers online facility, then the first step would be to visit their website.
In their website, by going to the loan section, select the business loan or small business loan option.
Download the application form and fill all the important details in it.
After that submit the application form.
When the customer service team of the bank informs you, submit your form for verification.
If you match the loan eligibility criteria, your loan will be approved and your loan amount will be disbursed to you within a few days.
Read More: 10 Examples Of Complete Information About Loan For Business