One common business challenge, especially among first-time entrepreneurs, is the unavailability of capital to run the daily operations. Thankfully, a business loan can help entrepreneurs with their financial requirements.

To provide a loan, lending institutions typically ask for verification documents including KYC documents, income proof, bank statements, etc. A very important document, especially for small business owners is the Income Tax Returns or the ITR .

Can you avail a business loan without ITR ? Read on to know more.

Business Loan Eligibility Criteria

First, let us see the basic eligibility criteria to get a business loan.

  • Experienced business owners, organisations, and even first-time entrepreneurs can apply for business loans:
    • Business owners – manufacturers, retailers, merchants, traders, proprietors, etc.
    • Organisations – NGOs, Trusts, co-operative societies, sole proprietorships, Limited Liability Partnerships (LLPs), Partnership concerns, etc.
    • First-time business owners, self-employed professionals such as freelancers and independent contractors, and start-ups can also apply for business loans.
  • Age Criteria: The borrower cannot be below the age of 22 at the time of loan application. At the time of maturity of the loan, the age of the borrower cannot exceed 65 years.
  • Loan Amount: Subject to criteria such as the applicant’s profile, credit score, the guarantor, nature of the business, etc, eligible applicants can get unsecured business loan amounts upto INR 50 lakhs*. 
  • Co-applicants: Co-applicants are allowed for business loans. They are available to borrowers as an option but are not mandatory. However, if the business is owned by multiple people or is a private limited company, then the documents and signatures of all directors will be required.
  • Turnover of the Business: This varies across lenders and is at the sole discretion of the financial institution.
  • Collateral: Typically, collateral is not required for business loans upto a certain point. However, to avail of loans such as a loan against property, bill discounting, letter of credit, etc., you may be required to pledge an asset such as immovable assets or financial assets (depending on the nature of the loan). 

What are the Business Loan Documents Required?

Lenders ask for the following verification documents for business loan applicants –

  • Completed application form
  • Business continuity plan
  • Passport-size photographs
  • 6 months Current Account bank statements
  • Rent Agreement
  • Shops and Establishment Certificates
  • Memorandum of Association (MoA) or Partnership Deed
  • Company’s Incorporation Certificate
  • Residence Proof: Bank statement, electricity bill, passport, voter’s ID card, Driving License, etc.
  • PAN Card of partnership(s), individual or company, whichever is applicable
  • PAN and Identity proof: Driving license, passport, Voter’s ID card
  • Income Tax returns of the past 2 years

How to Improve Chances of a Business Loan Approval without ITR?

A borrower may try one or more of the below steps to improve the chances of a business loan approval without ITR –

1. A Healthy CIBIL Score

Lenders look for a good CIBIL score even if you are armed with your ITRs. Do ensure that your CIBIL score is at least 750 before applying for an unsecured business loan. 

2. Unofficial Lenders

A few lenders may agree to provide a business loan without ITR. However, do note that their policies and the terms of such loans may be very different from that of conventional lenders /business loans. 

Please also note that Fullerton India requires all business loan applicants to provide ITR among other required documents. Applicants without ITR will be considered ineligible. 

3. Government Schemes

First-time entrepreneurs and budding business owners can avail a host of loan schemes introduced by the Indian government. These include:

  • The National Small Industries Corporation (NSIC) Subsidy
  • SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)
  • PSB Loans
  • Stand-Up India
  • Prime Minister’s Employment Generation Scheme (PMEGP)
  • Mudra Loan under the Pradhan Mantri Mudra Yojana (PMMY)

4. Personal Loans

If you are a small business owner and do not have ITR for your business entity, you can try to take a personal loan for self employed instead. Do note that in order to be eligible for this loan, you will need to provide the required documentation and match the eligibility criteria as per the lender’s policy for self-employed applicants. 

5. Co-applicants

If a close family member of the borrower is a professional with valid income proof, they are eligible to become co-applicants. This will increase the chances of the loan application being approved.

If you are looking for a business loan and your profile and available documents match the list mentioned above, visit your nearest Fullerton India branch or apply online on our website today. Using our business loan EMI calculator, you can select a tenure that best suits your requirements.

*Terms and conditions apply. Please note that this article is for your information only, and ITR is one of the mandatory documents to apply for a business loan with Fullerton India. Loans at the discretion of Fullerton India Credit Co. Ltd.

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