: Factors Affecting Business Loan Eligibility and Amount #IndiaNEWS #Business While planning a business can be easy, arranging capital for the same might be exhausting. That is when a business loan

Factors Affecting Business Loan Eligibility and Amount #IndiaNEWS #Business
While planning a business can be easy, arranging capital for the same might be exhausting. That is when a business loan comes into consideration. Loans can be a burden without proper knowledge; however, once you know the basics, they are the most convenient option. Business loans are a great way to save taxes with affordable interest rates, making them desirable for aspiring or established entrepreneurs.
Nowadays, a business loan is just a click away since many reliable financial institutions offer excellent schemes. These loans are quick and easy since they need minimum documentation and are flexible and collateral-free. Leading financial institutions like Clix Capital are helping thousands of people willing to start their business by granting hefty loans ranging between 5 and 50 Lakhs.
Though these loans require minimum documentation, various factors must be considered before applying. Let us look at the factors that affect the amount and eligibility for a business loan. #1 CIBIL Score/Credit Score
CIBIL (Credit Information Bureau (India) Limited) provides credit scores based on the financial behaviour of the applicant in the past. This affects the amount of loan to be sanctioned or even helps lenders decide if a person is eligible for a loan. A higher CIBIL score means better chances of receiving a loan, while a low score reduces the chances. Credit scores are also provided by other Indian bureaus such as Experian.

So, what is a CIBIL Score?

A CIBIL score is a three-digit number that reflects a person’s credit history. This score generally ranges between 300 and 900, while above 700 is considered a good score. This score is affected by the previous credit card payment history, EMI payments, loan payments, GST filing, income tax filing, and the entire Credit Information Report (CIR).
A low credit score or a CIBIL score can reduce eligibility and the loan amount.
#2 The Company Assets
Assets of a company impact the amount of the loan. While there are both secured and unsecured loans, secured loans have perks. The secured business loans demand collateral, and the companys assets serve that purpose. This way, the company assets might influence the eligibility for the loan. Since secured loans can result in higher borrower limits with reduced interest rates, they require collateral. For this reason, many prefer applying for unsecured business loans that offer more flexibility with no collateral requirement.
#3 The Margin of Profit and Loss

The profit margin and loss in the past years also affect a business loan since the lender wants to be assured of the loan repayment. The balance sheet reflecting the organisations profit and loss decides whether the borrower is reliable.