As a business owner, understanding how much turnover you should have for a business loan is essential. Several factors such as credit score, cash flow, and the age of your business, are considered before approving a business loan application. Business turnover also plays a role in approval and determining the terms of your business loan.
Basic requirements:
Every financial institute has a unique set of criteria when assessing a business loan application. Typically, they prefer businesses that generate sufficient revenue to repay the loan amount and interest. Bajaj Finance offers loans of up to Rs. 80 lakh at a competitive interest rate to businesses with a vintage of 3 years.
Type of loan:
The type of loan you are seeking also plays a crucial role in the turnover requirements. For instance, a short-term business loan generally has a lower turnover requirement than a long-term loan. Likewise, a line of credit may require higher annual turnover as it is a revolving loan facility where businesses access funds as and when required to support their working capital.
Collateral:
Secured business loans require collateral, which means the focus will be less on the turnover requirements if you have valuable assets to pledge. Unsecured business loans, which do not require collateral, may put more emphasis on the borrower's ability to generate sufficient turnover to repay the loan amount and interest.
Credit score:
Another essential factor that plays a significant role in the loan application process is a borrower's credit score. A high credit score generally represents creditworthiness, which means your loan application is more likely to be approved, at favourable terms and interest rates. Maintaining a good credit score is essential, as it increases your chances of eligibility for a business loan. This is especially true if your annual turnover is on the lower end of the spectrum.
The minimum turnover requirement for a business loan may vary for different financial institutions. By understanding the eligibility criteria for the type of business loan you want, you will be better prepared when applying. Remember, maintaining a good credit score, managing a healthy cash flow, and ensuring your business has consistent revenue can all help to increase your chances of approval for a business loan.
