How To Apply For Business Loan Without ITR – Documents Required and Eligibility
A constant flow of funds is crucial to either launch a new business or maintain the operations of an existing one. A business loan without ITR comes in handy for new entrepreneurs who need funding for their working capital needs. However, in most cases, you will need to submit income tax returns for the past 2 years while applying for financial assistance from lenders.
If you are an entrepreneur with a new start-up who doesn’t have adequate experience to file an ITR, you can opt for a personal loan for self-employed without ITR.
Importance of ITR for Availing a Business Loan
The Income tax returns are essential for availing a business loan as these act as proof that you have a source of income to repay what you are borrowing. The lending institutions will use your ITR to determine whether you are eligible for a loan.
Income tax returns usually serve these purposes when availing of a personal loan for business:
- ITR serves as a benchmark for the funds that a lending institution can offer.
- It enables the applicants to receive business loans at lower interest rates.
Benefits of Availing Business Loan without ITR
You can avail of a business loan to receive funds for a diverse range of business purposes. These include buying raw materials, installing new machinery, enhancing inventory, increasing manpower, and more.
As mentioned above, ITR is one of the most necessary documents that you need to submit when availing of a business loan. Your lender will check the ITR, among many other documents, before approving a personal loan for business. However, enterprises in their early days might not be able to file their income tax return due to various reasons.
It might happen that you do not have the necessary documents or experience to file ITR. Also, your business might not be able to generate enough revenue to cover loan repayment. Whatever be the reason, you can apply for a personal loan for self-employed without ITR instantly to meet business-related expenses.
A personal loan allows business owners to get access to a substantial amount of funds required for business operations without ITR instantly. Navi, for instance, offers a personal loan of up to Rs. 20 lakh at highly competitive interest rates. This loan comes with a completely paperless and hassle-free application process and minimal documentation.
Download the Navi app and avail a personal loan for business to meet the various expenses of your organisation.
Also Read: How To File ITR-2?
Who is Eligible for a Business Loan Without ITR?
The following are eligible to apply for a business loan without ITR:
- Individuals
- LLPs
- Companies
- Partnerships
- NGOs
- Trusts
- Cooperative societies
- Sole proprietorships
- Traders
- Retailers
- Manufacturers
- Self-employed individuals
- MSMEs
- Start-up enterprises, etc.
Eligibility Criteria for Business Loan Without ITR
If you do not possess an ITR but need to apply for a business loan, you need to be aware of the following eligibility criteria:
- Age: The minimum age at the time of loan application should be 18 years and a maximum of 65 years when it matures.
- Turnover: Turnover will vary from one lender to another.
- Credit score: You should have a credit score of not less than 750.
However, the eligibility requirements for these loans will differ across lenders.
Documents Needed for Business Loan Without ITR
Here are some of the essential documents that you should provide while obtaining a personal loan for self-employed without ITR:
- Identity proof documents such as Aadhaar, passport, and more
- Residence proof such as utility bills, passport, voter ID card, rent agreement, etc.
- PAN of the company, individual, partnership, or others as applicable
- Current account statement
- Passport-size photographs
You should remember that the documents necessary to apply for this loan will usually vary across lenders.
Importance of Credit Score for Business Loan Without ITR
To avail of a business loan without ITR, you should compulsorily have a high credit score. Applicants with a credit score above 750 are considered low-risk borrowers. Accordingly, if your CIBIL score is above 750, there’s a high chance of loan approval.
So, if you are planning on taking this loan for your business, make sure to improve your credit score.
Also Read: How To Avail No Credit Check Personal Loans In India?
Steps to Avail Business Loans Without ITR
Given below are the steps to get a business loan without ITR:
- Step 1: You need to research well about the banks/financial institutions and their interest rates. Choose an institution whose terms and conditions are favourable for you.
- Step 2: Check your eligibility for availing a business loan. You can visit the nearest branch to make enquiries. Alternatively, you can visit the official website as well.
- Step 3: Choose the tenure based on your financial needs.
- Step 4: Check all the documents that you require.
- Step 5: Fill up the application form for the business loan and submit the necessary documents.
Interest Rates and Repayment Options for Business Loans Without ITR
The following table provides the important details of business loans that do not require ITR:
| Financial Institution | Loan Amount | Interest Rate | Tenure |
| HDFC Bank | Ranges from Rs. 1 lakh to Rs. 20 lakh | 18% to 20% per annum | 12 – 36 months |
| IDFC First Bank | Ranges from Rs. 1 lakh to Rs. 9 lakh | 19% to 24% per annum | 12 – 48 months |
| Bajaj Finserv | Ranges from Rs. 1 lakh to Rs. 15 lakh | 19% to 25% per annum | 12 – 48 months |
| Tata Capital | Ranges from Rs. 1 lakh to Rs. 20 lakh | 19% to 22% per annum | 12 – 36 months |
| Lendingkart | Ranges from Rs. 1 lakh to Rs. 10 lakh | 1.5% to 2% per month | 1 – 36 months |
Alternative Options for Business Loans
Given below are the various alternatives to business loans:
- Personal Loan: This is an unsecured loan which people can avail for various purposes. Financial institutions usually refuse to sanction business loans to people who don’t have business experience or much revenue. In such situations, personal loans can solve your financial woes.
- Micro Loans: These can be effective financial solutions for small and micro businesses that don’t have any access to traditional lenders. Micro loans are primarily meant for low-capital businesses in rural areas. These loans enable the launching of a new business, payment of wages, sustenance of cash flow and debt consolidation, among others.
- Term Loan: These are short-term loans offered to businesses for their various financial needs. Financial institutions, including credit unions and banks, provide user-friendly term loans. One needs to repay term loans via regular payments over the agreed-upon tenure.
Businesses can use these loans if they do not qualify for long-term credit facilities. - Equipment Financing: There are two financing options you can consider for purchasing equipment- equipment loans and leases. The former is ideal for businessmen who can afford to make large down payments to purchase expensive equipment.
- Line of Credit: This option allows a business to access funds on demand up to a certain borrowing limit. Financial institutions issue both secured and unsecured lines of credit. Once the user repays the loan, he/she can again draw the same amount. Their workings are similar to that of a credit card.
- Merchant Cash Advances: A loan that is secured by future sales is referred to as merchant cash advances. Generally, the lender provides a lump-sum payment to the borrower who repays the amount after sales activities. Generally, retail outlets, medical offices and restaurants are eligible for this particular form of financing.
- Invoice Factoring: Here, one can sell outstanding invoices and finance a business. Factoring companies purchase invoices and credit an amount that is equal to almost 90% of the invoice value. The company deposits the rest of the amount after cumulating the payments and deducting the factoring fee.
- Invoice Financing: Here, companies use invoices as collateral and provide loans. The amount of the loan depends on the invoices’ value. This is an ideal option for businesses that don’t require quick cash. In invoice financing, the lender does not buy your invoices but offers a loan against them.
Government Subsidy Loans for Businesses
Given below are the details of some of the important government subsidy loans for businesses:
1. Stand up India
This Government of India scheme was initiated to fund businesses of women entrepreneurs and people falling under the SC/ST quota.
The loan amount ranges between Rs. 10 lakh and Rs. 1 crore. Businesses that deal with manufacturing, trading, services or agro-allied activities are eligible to avail loans under this scheme.
2. SIDBI Make in India Loan for Enterprises (SMILE)
SIDBI (Small Industries Development Bank of India) governs this particular loan scheme. Eligible candidates can get term loans and soft loans for their business to meet their required debt-equity ratio. They can avail the loan for establishing a micro, small or medium enterprise (MSME). This scheme lays emphasis on the manufacturing and services sector.
3. Pradhan Mantri Mudra Yojana (PMMY)
This scheme by MUDRA offers collateral-free loans to non-farm small and micro enterprises and non-corporates. Its advantages include zero prepayment charges, flexible repayment tenure (12 months to 5 years) and a concessional interest rate for women.
The maximum loan amount under PMMY is Rs. 10 lakh. Applicants need to be at least 18 years and less than 65 years in age to be eligible. They must have a good repayment history with no loan defaults previously.
4. Credit Guarantee Scheme (CGS)
The Government of India launched this scheme to catalyze the growth of the credit delivery system for the MSME sector. CGS offers term loans and working capital loans of up to Rs. 200 lakh per borrower. Lending institutions include public sector banks, private banks, selected foreign banks, Regional Rural Banks (RRBs) and the State Bank of India with its associate banks.
5. National Small Industries Corporation (NSIC Subsidy)
The Indian Government introduced this scheme to help MSMEs with procuring raw materials and advertisements. Its features include cost-free tenders, land and building financing and no security deposit.
This scheme allows Small Scale Industries (SSIs) to access tenders without any costs. Additionally, these industries don’t have to pay any security deposit to apply for the loan. NSIC Subsidy scheme finances the land and building if the cost of the project doesn’t exceed Rs. 25 lakh.
Banks Offering Business Loans without ITR
There are several banks and other financial institutions that offer business loans without ITR. Given below are some of these institutions:
- HDFC Bank
- IDFC First Bank
- Bajaj Finserv
- Tata Capital
- Lendingkart
Final Word
More and more financial institutions today are offering business loans without ITR for self-employed people. This is particularly helping the small and medium businesses along with start-ups to maintain their operations and grow. You can refer to this complete guide if you don’t have ITR and want to fund your start-up through a business loan.
FAQs
Ans: Most financial institutions require Income Tax Returns or other income proofs to sanction a business loan. There is no specific minimum ITR amount that is required to get a business loan.
Individuals who do not have ITR can approach several banks and NBFCs offering loans at relatively high interest rates.
Ans: No, all banks don’t sanction business loans without ITR. Only a few financial institutions allow applicants to opt for a business loan without ITR. However, applicants need to have a high credit score and fulfil other eligibility criteria to get a business loan without ITR.
Ans: There are a few disadvantages of applying for a business loan without ITR. These include delayed processing of the loan application, short repayment tenure and lesser amount of sanctioned loan.
Ans: You can apply with a co-applicant for a business loan. If the co-applicant has a stable source of income and can produce evidence for the same, the chances of your business loan getting sanctioned without ITR increases.
Ans: No, it is not possible to avail of a personal loan for self-employed people without income proof. You need to provide necessary income proof documents as required by your financial institution for easy loan approval.
Ans: It is essential to have a high credit score of at least 750 to avail of a personal loan for self-employed individuals without ITR. A low score might impact the chances of loan approval. So, make sure to improve your credit score before applying for such loans.
Ans: The minimum income requirement of a self-employed applicant without ITR looking to avail of a personal loan for business will usually vary from one lender to another. You should check the eligibility requirements of your preferred lender before initiating the application procedure.
Ans: The interest rate for these loans usually differs across lenders. However, the following are some of the factors that can potentially impact the interest rate on your personal loan:
– Past loan repayment behaviour
– Credit score
-Income, etc.
Ans: You can find numerous lenders in the market today offering personal loans for self-employed individuals. To find a suitable lender, you should compare and check the interest rates, repayment tenure, associated charges and other features.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
