Free business loan eligibility estimator. Soft-check your eligibility based on revenue, vintage and profit.
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⚠️ Estimates only. Not financial advice. Consult a licensed professional.
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Business loan evaluation is fundamentally different from personal loan assessment. Banks do not just look at your personal income — they assess your business's ability to generate consistent cash flow to service debt. Understanding this evaluation framework helps you prepare a stronger application, approach the right lenders, and present your business in the most favourable light.
Business vintage: Most PSU and private banks require 2–3 years of continuous operations with financial records. First-year businesses are typically declined by mainstream banks. For businesses under 2 years, MUDRA loans (under ₹10 lakhs) and fintech lenders (FlexiLoans, Lendingkart, Capital Float) are better options with faster, cash-flow-based underwriting.
Annual turnover: PSU banks require ₹15–25 lakhs minimum annual turnover. Private banks typically set ₹25–50 lakhs as the threshold. NBFCs and fintechs may lend at lower thresholds using GST data and bank statement analysis rather than formal audited financials.
Profitability: Net profit margins above 10–15% are expected. Loss-making businesses rarely qualify for standard term loans, though overdraft facilities against collateral or government-backed CGTMSE loans may still be accessible.
DSCR (Debt Service Coverage Ratio): Must be 1.25× or above. This single ratio — Net Operating Income divided by Annual Debt Service — determines approval at most banks. Use our DSCR Calculator to check your position before applying.
The Pradhan Mantri MUDRA Yojana (PMMY) offers collateral-free business loans through three categories based on business stage and amount required:
Shishu: Up to ₹50,000 — Startups and very small businesses
Kishore: ₹50,001–₹5L — Established micro businesses
Tarun: ₹5L–₹10L — Growing small businesses needing expansion capital
Available through all scheduled banks, Regional Rural Banks (RRBs), Microfinance Institutions (MFIs), and NBFCs. No collateral required. No application fee. Income proof flexibility — GST returns and bank statements accepted in lieu of formal audited accounts.
The Credit Guarantee Fund Trust for MSEs enables banks to provide business loans up to ₹2 crore without property collateral. The government provides a guarantee covering 50–85% of the loan amount, which dramatically reduces lender risk and makes approval accessible even for asset-light businesses. Apply through any scheduled bank or participating NBFC — the bank handles the CGTMSE guarantee registration.
Since 2017, regular and consistent GST filings have become one of the most credible proofs of business activity for lenders. Banks now access GST data to verify stated turnover, assess revenue trends, and evaluate business consistency. Irregular or missing GST filings are treated as a significant red flag — potentially more damaging than a slightly lower CIBIL score. File on time every month without exception; it directly affects your loan eligibility and the loan amount you can access.
Lendingkart, FlexiLoans, Capital Float, and NeoGrowth specialise in SME lending using alternative data — GST returns, bank statements, UPI transaction patterns, and marketplace seller ratings. Approval in 24–72 hours. Rates: 18–30% (significantly higher than banks). Best for urgent working capital needs when bank processing timelines (2–4 weeks) are too slow. Always compare the total cost of borrowing, not just the stated rate.