Want to avail Business Loan without an ITR? Startups & New Businesses, Do not worry.
Budding entrepreneurs and first-time business owners may not always possess optimum or sufficient business experience to file an ITR. This does not signify that they are not eligible to get business loans to start their own business or enterprises. In today’s banking and financial market there are numerous lenders, including Private and Public Sector Banks, NBFCs and MFIs that offer startup loans, business loans, MSME loans and working capital loans at competitive interest rates with flexible repayment options. However, to avail loans for existing business at lower interest rates, you need to file ITR of at least 1 year, whereas startups and new businesses are exceptions.
With the emergence of Start-up enterprises, Small Scale Industries (SSIs) and Micro, Small and Medium Enterprises (MSMEs), the requirements of business loans have increased manifold. Therefore, to avail business loans at attractive interest rates, you need to have strong ITR along with you also need to maintain good credit score. Before sanctioning any business loan, financial institutions check your financial statements, ITR documents, income proofs, credit score, and identity, address and business address proofs. However, business loans without ITR can be majorly availed by Startups or new businesses.
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Business Loan Eligibility without ITR
Eligible Entities
- Start-up enterprises, first-time business owners and self-employed professionals are eligible.
Eligibility Criteria
- Minimum age criteria: 18 years at the time of loan application & max. up to 65 years at the time of loan maturity
- Credit Score: Above 750, as close to 900 is considered good
- Co-applicant: Optional, as per applicant
- Annual Turnover: Defined by lender, varies from bank to bank
- Collateral: Not required for loans up to Rs. 2 crores (Excluding equipment finance, bill discounting, letter of credit, etc.)
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Business loans without ITR are sometimes difficult to obtain from Private and Public Sector Banks, as there are only few financial institutions that offer business loans without checking your ITR or GST number. For individuals who do not have ITR can approach NBFCs and MFIs to avail funds. The interest rates offered by these financial institutions are comparatively on higher side. Another alternative to avail business loan without ITR or income proof is loan against FD, Property or Bonds.
Business loans can be used to various business purposes like business expansion, buying plant & machinery, purchasing land or office space, buying raw materials, enhancing stocks and inventory, paying-off salaries, debt consolidation, hiring new staff, undertaking training programs and many more.
Documents required
- Duly filled application form with Passport-sized photographs
- Identity Proof: Voter’s ID card, passport, driving license
- Business existence and address proofs
- Income Proof: Last 12 months bank statement
- PAN card of company, individual or partnership(s), whichever applicable
- Residence Proof: Driving License, voter’s ID card, passport, electricity bill, bank statement, rent agreement, etc.
- Company’s Incorporation Certificate
- Shops and Establishment Certificates and Rent Agreement
- Any other document required by the lender
Entrepreneurs who want to avail business loans without ITR can also check and compare various loan schemes introduced by Government of India in past few years, such as Mudra Loan under Pradhan Mantri Mudra Yojana (PMMY), Prime Minister’s Employment Generation Programme (PMEGP), National Small Industries Corporation (NSIC) Subsidy, PSB Loans in 59 minutes, Stand-up India, SIDBI Make in India Soft Loan Fund for MSMEs (SMILE), etc. Almost every loan scheme is offered without any collateral or security but regarding business loans without ITR, you can visit the official website of these schemes and check their eligibility criteria.
Every financial institution offers business loans with their own terms and conditions. Therefore, it is always recommended to check and compare the rate of interest, repayment tenure, foreclosure charges and loan amount before finalizing on the loan deal and lender that suits your business requirements.
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Importance of Credit Score in availing loans at low interest rate
Credit score always plays a vital role in getting you a business loan at low interest rate, even if you do not have ITR to submit. Credit score depicts the creditworthiness and repayment capacity of an applicant, any credit score more than 750 and closer to 900 is considered good by Private and Public Sector Banks & NBFCs. Credit score does not changes overnight, as it take few months to reflect the changes that is generated by credit bureaus from your financial documents provided by your bank to credit bureaus. However, if maintained well can showcase good results by helping you in getting a business loan to meet your urgent cash requirements, enhancing your cash flow or meeting working capital needs.
