Did you know that 51% of Indians are self-employed? If you are like most self-employed professionals and wondering whether you can get a business loan to finance your business operations, this article is for you.

Be it to cover labour costs, purchase new inventory, expand your enterprise, or pay shipping fees; you can fund all your short and long-term business needs with a loan.

Various lenders provide business finance for self-employed professionals. However, there are a few things you must know before approaching a lender.

Loan eligibility criteria

The business loan eligibilitycriteria for self-employed individuals typically comprise income, age limit, business health, CIBIL score, and more. These conditions help lenders evaluate whether you can repay the loan amount on time.

If you opt for business finance with Tata Capital, the eligibility for self-employed professionals is:

  • You should be between 25 to 65 years of age.
  • Your CIBIL score should be 700 or above.
  • Your business must be profitable for 3 consecutive financial years.
  • Your balance sheet should be audited by a registered Chartered Accountant (CA).
  • Your business turnover should display an upward trend.

Additional Read: Common Hurdles to Tackle While Availing Business Loan

Documentation

While paperwork requirements can vary for lenders, Tata Capital asks for the following to approve your business loan for self-employed professional:

  • Loan application with passport size photographs affixed
  • Driving license/ Aadhar card/ passport/Voter ID
  • Business ownership papers and Trade License/ Establishment/ Sales Tax Certificate
  • Computation and Income Tax Returns or ITRs for the past 2 years
  • Certified copy of Sole Proprietorship declaration or Partnership Deed agreement
  • Profit/Loss (P/L) statement for the last 2 years
  • Audited balance sheet
  • Certified bank statements of the company for the past 6 months
  • PAN Card
  • Memorandum and Articles of Association papers
  • Registration of Incorporation document

Repayment tenure

Business loans for self-employed individuals can have repayment tenures between 12 months and 3 years. Your loan tenure determines your EMIs and interest payable. Here, the smaller your term, the higher the instalments, and vice versa.

However, if you opt for a shorter duration, you may pay marginally higher EMIs, but you will save on the total interest paid.

Interest rates

The business loan interest rates also vary from one lending institution to another. However, in some cases, if you have a stellar CIBIL score, you can secure a loan offer at reduced rates. With Tata Capital, you can get competitive loan rates, starting at 19%.

Additional Read: Evolution of Business Loan Interest Rates in the Recent Past

Additional charges

Like any other loan, business financing also entails additional charges. These include processing fees (up to 2-3% of your borrowed amount), statement/document charges, part-prepayment charges, foreclosure charges, etc. Before applying for a loan, read the fine print and compare these charges from multiple lenders.

Over to you

Now that you know about business financing for self-employed professionals, it’s time to get the funds you need from a reliable lender. Opt for Tata Capital’s business finance offerings. Score attractive interest rates, relaxed eligibility conditions, flexible EMI plans, and more.

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