Business Loan Eligibility Calculator
Business loans provide the capital needed to grow or sustain your enterprise. Assessing eligibility ensures affordable repayments. Use Loanpao’s business loan eligibility calculator to plan your business financing with confidence.
Calculate Your Business Loan Eligibility
What Is Business Loan Eligibility?
Business loan eligibility is determined by lenders based on your business’s financial health and repayment capacity. Key factors include annual turnover, profit, credit score, and existing debts.
How To Use Business Loan Eligibility Calculator?
To use the business loan eligibility calculator, follow these steps:
- Enter your annual business turnover and existing EMIs for other loans.
- Specify the desired loan tenure (up to 5 years).
- Input the interest rate offered by the lender (typically 12-18% for business loans).
- The calculator will display your eligible loan amount and monthly EMI.
How Is Business Loan Eligibility Calculated?
Eligibility is based on turnover, existing debts, tenure, and interest rate. For example:
- Annual Turnover: ₹10,00,000
- Tenure: 3 years (36 months)
- Interest Rate: 12%
Step 1: Calculate the maximum EMI you can afford
Banks allow up to 50% of monthly turnover (turnover/12) for EMIs:
Monthly Turnover = 1000000 ÷ 12 = 83333.33
EMI = 83333.33 × (50/100) = 41666.67
So, you can afford ₹41,666.67 per month as EMI.
Step 2: Input values in the formula
The loan eligibility formula is:
P = EMI × [(1+r)^n - 1] / [r × (1+r)^n]
Where:
- P = Loan amount
- EMI = ₹41,666.67
- r = Monthly interest rate = 12% ÷ 12 = 0.01
- n = Loan tenure in months = 3 × 12 = 36 months
P = 41666.67 × [(1+0.01)^36 - 1] ÷ [0.01 × (1+0.01)^36]
P ≈ ₹12,55,737.54
Therefore, the eligible loan amount is approximately ₹12,55,737.54.
Business Loan Eligibility Criteria
| Criteria | Details |
|---|---|
| Age Limit | 21 to 65 years (business owner) |
| Minimum Turnover | ₹10 lakh annually |
| Maximum Loan Tenure | 5 years |
| Credit Score | Preferably above 700 |
| Business Vintage | Minimum 2 years in operation |
Documents Required For Business Loan Eligibility
- Application Form: Duly filled business loan application form.
- Photographs: Recent passport-sized photos of the applicant.
- ID Proof: Aadhaar Card, PAN Card, Voter ID, or Passport.
- Address Proof: Utility bill, Aadhaar Card, or rental agreement.
- Business Proof: GST registration, business license, or partnership deed.
- Financial Documents:
- ITR (2 years)
- Bank statements (6-12 months)
- Balance sheet and profit & loss statement (2 years)
Factors Affecting Business Loan Eligibility
Annual Turnover
Higher turnover increases eligibility for larger loan amounts.
Credit Score
A score above 700 improves approval chances and may secure lower rates.
Business Vintage
Businesses operating for over 2 years are preferred by lenders.
Existing Debts
High EMIs may reduce eligibility; clearing debts can help.
Profitability
Consistent profits enhance lender confidence.
How To Improve Your Business Loan Eligibility?
Maintain a Good Credit Score
Pay EMIs and bills on time to keep your score above 700.
Increase Turnover
Boost sales to show strong business performance.
Reduce Existing Debts
Lower your debt-to-income ratio by paying off loans.
Maintain Accurate Financial Records
Keep updated ITRs, balance sheets, and bank statements for transparency.
Frequently Asked Questions
Banks evaluate annual turnover, credit score, existing debts, and business vintage, limiting EMI to 50% of monthly turnover.
Up to 5 years, depending on the lender and loan purpose.
Yes, but startups may need a strong business plan and may face stricter eligibility criteria.