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With the emergence of Start-up Enterprises and Micro, Small and Medium Enterprises (MSMEs), numbers of applications for a business loan has been increasing considerably. Therefore, to avail business loans at attractive interest rates, borrowers need to meet all business loan eligibility criteria like they should maintain a good credit score, file ITR, have a good turnover, and submit all documents. While established enterprises have all documents to get a business loan, a nascent enterprise may not have all perquisites.

For example, a startup may not have sufficient experience to file income tax returns. ITR, whereas, is an important financial document required for business loan application. However, it doesn’t mean that first-time business owners are not eligible to get a business loan to start their own business or expand the existing business. Today, multiple lenders including public and private banks and NBFCs offer business loans with flexible eligibility criteria.

How to get a business loan without ITR?

NBFCS & MFIs

To get a business loan at lower interest rates, a business owner needs to file ITR to meet the working capital requirements of his/her business. Only few public and private sector banks offer business loans without checking your ITR. Therefore, getting business loans from mainstream lenders may be a challenging task for micro and small enterprises. Loan applicants who don’t have ITR documents can approach NBFCs (Non-Banking Financial Companies) and MFI (Microfinance Institutions) to get a business loan. They can also explore loan against property. 

Loan schemes introduced by Government of India

Business loan schemes introduced by the Government of India in recent years can be the best bet for entrepreneurs who want to get a loan for their business without ITR. Most popular business loan schemes launched by the government of India include MUDRA Loan, Stand-up India, Prime Minister’s Employment Generation Programme (PMEPG), SIDBI Make in India Soft Loan Fund for MSMEs, PSB Loans in 59 minutes, National Small, Industries Corporation (NSIC), and many more. 

Borrowers don’t need to submit collateral or security to get a business loan under almost all schemes mentioned above. Visit the official website of these schemes to know about loans without ITR. 

Eligibility for business loan without ITR

• A business loan is offered to individuals, MSMEs, SMEs, retailers, traders, manufacturers, sole proprietorships, limited liability partnerships (LLPs), trusts, NGOs, co-operative societies, etc.
• First-time borrowers, entrepreneurs and self-employed professionals can also get a business loan. 
• Age limit: Minimum age of the borrower at the time of loan application should be 18 years and maximum of 65 years at the time of loan maturity.  
• Credit Score: While a credit score of 750 or above is considered suitable for a business loan, some lenders may consider 700+ as well. 
• Turnover: Vary from lender to lender.
• Collateral: In case of unsecured business loan, collateral not required. For equipment finance, bill discounting and letter of credit, you may need to submit collateral. 
• Loan amount: Vary from lender to lender; starting from Rs. 10,000 to Rs. 10 crore, depending on business requirements and the applicant’s profile. 

Documents required to get business loan

While the documentation may vary from scheme to scheme, here is the checklist of common documents required to avail a business loan without ITR:

• Duly filled application form of the business loan with passport-sized photographs
• Crisp business plan
• Identity Proof: Voter’s ID card/ passport/ Aadhaar card/ driving license
• Residence Proof: Driving License/ voter’s ID card/ passport/ one of utility bills/ bank statement/ rent agreement
• Business continuation and address proof
• PAN card of company, individual or partnership(s), whichever is applicable
• Incorporation Certificate of the company
• Partnership Deed or MoA (Memorandum of Association)
• Shops and Establishment Certificates and Rent Agreement
• Current Account bank statement
• Every lender sets its own terms and conditions to lend business loans. Hence, it is advisable to check the eligibility criteria, compare rates, loan amount, processing fees, foreclosure charges and loan tenure before finalizing the lender. Based on your requirements and eligibility, you can close the deal that suits your requirements.  

Conclusion

Remember that credit score is one of the most important criteria considered by lenders to offer a business loan at low interest rate, even without ITR. It is the manifestation of creditworthiness and repayment capacity of an applicant. CIBIL score ranges from 300 to 900 and credit score more than 750, in some cases, 700 is considered good by lenders. If you don’t have ITR, make efforts to improve your credit score. Credit bureaus consider factors like repayment history, number of credit cards or term loans obtained, bank accounts, number of bank accounts, etc. to make the credit report. If you have a good credit score and well business plan, getting a business loan will be pretty easy even without ITR. 

Business loans can be availed to meet a wide range of business purposes like business expansion, meeting working capital needs, buying plant & machinery, purchasing office space, enhancing cash flow, buying raw materials, enhancing stocks and inventory, debt consolidation, staff payment, hiring new staff, and so on and so forth.