SME Loan Eligibility Calculator

1. Age:
24 to 65 years

2. Turnover:
80 Lakh to 500 Crore

3. Ownership:
Residence or Office to be owned

4. Minimum Business Vintage:
Your business should have been operational for at least 3 years.

5. Credit History:
A minimum of 6 months of credit history is required.

Lenders use specific parameters to calculate SME Loan eligibility:

1. Revenue Assessment

Annual turnover and net income are assessed to determine repayment capacity.

2. Financial Ratios

- Debt-to-income ratio: Reflects how much of your income is allocated to existing debts.
- Current ratio: Assesses liquidity to meet short-term obligations.

3. Credit History Check

Past credit behaviour, repayment track record, and existing debt obligations are evaluated.

4. Collateral Valuation (if applicable)

For secured loans, the value of collateral is appraised to ensure loan coverage.

5. Business Plan Evaluation

Lenders review growth projections and loan utilisation plans.

This structured approach ensures lenders accurately evaluate an applicant’s repayment capacity.

Certain factors can either strengthen or weaken your eligibility:

1. Positive Factors

- High Credit Score: Reflects financial responsibility.
- Consistent Revenue: Demonstrates business stability.
- Strong Financial Ratios: Indicates sound financial health.
- Timely Tax Filings: Ensures compliance and credibility.

2. Negative Factors

- Low Credit Score: Suggests a higher risk to lenders.
- Irregular Cash Flow: Indicates potential repayment issues.
– High Debt-to-Income Ratio: May signal over-leverage.
- Incomplete Documentation: Can lead to delays or rejection.

Understanding these factors helps applicants address weaknesses and present a stronger case.

Improving your SME Loan eligibility requires strategic efforts. Here’s how:

1. Maintain a Strong Credit Score

Repay existing debts on time and avoid multiple loan applications within a short period. A strong credit score not only improves your chances of approval but also helps you negotiate a better SME Loan interest rate.

2. Organise Accurate Documentation

Ensure all financial records, tax filings, and business registrations are up-to-date. Providing clear and comprehensive information, including all necessary SME Loan documents, in your loan application can significantly enhance your approval chances.

3. Enhance Cash Flow

Optimise working capital management to ensure steady inflow and outflow. Use bank statements to demonstrate consistent revenue.

4. Reduce Existing Debts

Pay off smaller loans or liabilities to improve your debt-to-income ratio.

5. Showcase Business Potential

Create a compelling business plan with clear growth projections and loan utilisation strategies.

Focusing on these areas can address common challenges and improve your standing with lenders.