Business Loan Eligibility Criteria

Updated on November 09, 2025

Author: MybankingTips Team

Before applying for a Business Loan, it's always beneficial to check your eligibility. Different banks have different requirements, so knowing your eligibility can help you understand if you're likely to get approved or not. Your chances depend on thinags like your financial history, credit score, repayment history and how stable your business is.

Most banks and NBFCs have specific criteria that applicants need to meet before getting a business loan approved. These criteria shall differ from one lender to another and are based on factors like the applicant's profile, type of business, its requirements, and various other related factors.

Comparison Table of Business Loan Interest Rates offered by MybankingTips Partners:

Bank/NBFC/Fintech	Interest Rate
SBI Bank	9.10% p.a.	Apply Now
HDFC Bank	10.00% - 22.50% p.a.	Apply Now
Kotak Mahindra Bank	16% p.a. onwards	Apply Now
RBL Bank	14%-26% p.a.	Apply Now
ICICI Bank	Up to 17% p.a.	Apply Now
Axis Bank	10.75% p.a.	Apply Now
IDBI Bank	8.05% to 13.45% p.a	Apply Now
Bank Of Baroda	10% to 15% p.a	Apply Now
Ujjivan Small Bank	Up to 2.50%	Apply Now
Bajaj Finserv	9.75% - 25% p.a.	Apply Now
IIFL Finance	12.75% - 44% p.a.	Apply Now
FlexiLoans	1% per month onwards	Apply Now
ZipLoan	1% - 1.5% per month (Flat)	Apply Now
Indifi Finance	1.5% per month onwards	Apply Now
Five Star Business Finance	Up to 2%	Apply Now
Lendingkart Finance	1.25% per month onwards	Apply Now
Tata Capital Finance	12% p.a. onwards	Apply Now
NeoGrowth Finance	15% p.a. onwards	Apply Now
Hero FinCorp	Up to 26% p.a.	Apply Now
Aye Finance	Up to 2.5%	Apply Now
Clix Capital	Up to 3%	Apply Now
Protium Finance	Up to 1.5%	Apply Now
HDB Finance	8% - 26% p.a.	Apply Now
U GRO Capital	Up to 9% p.a.	Apply Now
Mcapital Business	Up to 2% p.a.	Apply Now

Eligibility Criteria for Business Loan

Age Criteria	Min. 21 years at the time of loan application & Max. 65 years at the time of loan maturity
Credit Score	750 or above (Preferred by most private and public sector banks)
Business Vintage	Min. 1 year or above
Business experience	Min. 1 year, business location to remain same
Annual Turnover	Shall be defined by the Bank/NBFC
Nationality	Indian citizens, should not have defaulted on any previous loan(s) with any lender
Additional Criteria	Applicant must own either a residence, office, shop, or godown
Eligible Entities	Startups, MSMEs, Sole Proprietorships, Individuals, Partnership Firms, Public and Private Limited Companies, Limited Liability Partnerships, retailers, traders, manufacturers, and other non-farm income-generating business entities engaged only in the services, trading, and manufacturing sectors

Note: The eligibility criteria mentioned above are for guidance purposes only. The actual eligibility criteria set by Banks/NBFCs may vary at their discretion and will be specified at the time of submitting the loan application.

Factors that determine Business Loan Eligibility

Business loan eligibility depends on several key factors:

Applicant's age
Nature and type of business
Applicant's repayment capability and creditworthiness
Details of collateral/security required for secured business loans
Any history of loan defaults or repayment history
Applicant's credit score, financial history, and source of income
Business stability, vintage, turnover, and profitability

Purpose of availing Business Loan

Business loans can be a lifeline for individuals, business owners, startups, self-employed professionals, entrepreneurs, and MSMEs in need of extra funds for various purposes. These include meeting working capital needs, expanding the business, purchasing machinery/equipment, paying rent or salaries, managing debt, or maintaining cash flow. However, each lender sets specific eligibility criteria that applicants must meet to qualify for a business loan.

Frequently Asked Questions

You can borrow any amount you need for a business loan, but some lenders offer collateral-free loans up to Rs. 2 crores at most.

The interest rate for business loans starts at 16% per annum and may go higher based on the applicant's profile and business needs.

Banks and financial institutions usually prefer a credit score of 750 or higher when considering loan applications. If your credit score is below 750, they might still approve the loan but could charge a higher interest rate.

Yes, having a problematic background can greatly reduce your chances of getting a loan approved. If a bank discovers that you have been involved in fraud or have a criminal record, they will likely reject your loan application.