How much amount business loan eligible itr based

Question BankCategory: OthersHow much amount business loan eligible itr based
Kollipara sundaraiah asked 1 year ago

Assess sales turnover and net profit declare(show) in it returns filed last 3years details mentioned below.
F.y 17-18 sales turnover Rs:7,10,000/- and net profit declare Rs:2,90,000/-
F.y 18-19 sales turnover Rs:7,50,000/- and net profit Rs:3,20,000/-
F.y 19-20 sales turnover Rs:8,00,000/- and net profit Rs:3,80,000/-
Assess how much amount business loan eligible from bank itr based.

1 Answers
Aditya answered 1 year ago

Business loan eligibility of the applicant vary from bank to bank. One bank can reject a loan application while other bank can offer him loan.
For Example, As per HDFC Bank, The following people are eligible to apply for a Business Growth Loan:

  • Self employed individuals, Proprietors, Private Ltd. Co. and Partnership Firms involved in the business of Manufacturing, Trading or Services.
  • The business should have a minimum turnover of Rs. 40 lakhs
  • Individuals who have been in the current business for a minimum of 3 years, with 5 years total business experience.
  • Those whose business has been profit making for the previous 2 years
  • The business should have a Minimal Annual Income (ITR) of Rs. 1.5 lakhs per annum
  • The applicant should be at least 21 years at the time of applying for the loan, and should be no older than 65 years at the time of loan maturity

Turnover of your business is less than 40 lakh Hence you are not eligible for a business loan from HDFC Bank. But you can go for other loan products like Cash Credit limit based on stock or debtors, Personal loan, Loan against assets etc. 
As I said earlier loan eligibility vary from bank to bank. Some banks states that Net income of the concern should be more than ₹150,000 per annum for business loan up to ₹1,500,000 and over ₹300,000 for business loan above ₹1,500,000. 
Further Please note that ITR is not the only deciding factor for quantum and eligibility of business loan but it is surely one of the factors. The some factors deciding business loan eligibility includes :-

  • Age of the applicant: The applicant should be min 21 years & max. 65 years.
  • Income of the applicant: Business should be profit making at least for the past 2 years.
  • Business Turnover: ₹150,000 p.a. should be the minimum annual income.(turnover limit may vary bank to bank)
  • Co-applicants: It there is co-applicant then this is also a factor but it is not mandatory in case of business loan.
  • Business organization and industry. 
  • Existing loans and Growth Prospectus. 
  • Available cash flows and Repayment capability.
  • Interest coverage ratio. 
  • CMA Data report. 
  • Background of applicant and creditworthiness etc.

Generally a lender would not lend more than 30% of annual business revenue. 
Hence to avail a business loan:-

  1. First you need to prepare a project report of your business showing complete detail about all the factors mentioned above along with future potential of your business and owner’s fund detail, purpose of loan specifying the requirement clearly. 
  2. Submit the project report to the bank from which you want to take a loan along with your loan application and other relevant documents like (ITRs, IDs, CMA data, Projected balance sheets etc.)
  3. After analyzing your application , bank can either reject it or offer you a business loan as per your eligibility. 
  4. If application is rejected, you can apply in another bank. 

You can also apply loan under PARDHAN MANTRI MUDRA YOJANA(PMMY)-
Loans under PMMY scheme are available to non-farm micro or small enterprises engaged in income generation through manufacturing, trading and services. Enterprises involved in allied agricultural activities can also apply for Mudra loans. 
Under the aegis of Pradhan Mantri Mudra Yojana (PMMY), MUDRA has created products/ schemes named ‘Shishu’, ‘Kishore’ and ‘Tarun’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth to look forward to :

  • Shishu : covering loans upto  50,000/-
  • Kishor : covering loans above  50,000/- and upto 5 lakh
  • Tarun : covering loans above  5 lakh and upto 10 lakh

With an objective to promote entrepreneurship among the new generation aspiring youth, it is ensured that more focus is given to Shishu Category Units and then Kishore and Tarun categories.
Within the framework and overall objective of development and growth of micro enterprises sector under Shishu, Kishore and Tarun, the products being offered by MUDRA are so designed, to meet requirements of different sectors / business activities as well as business/ entrepreneur segments.
The funding support from MUDRA are of two types:

  • Micro Credit Scheme (MCS) for loans up to 1 lakh finance through MFIs.

Micro Credit Scheme is offered mainly through Micro Finance Institutions (MFIs), who deliver the credit up to  1 lakh, for various micro enterprise / small business activities. Although the model of delivery may be through SHGs/JLGs/ Individuals, the loans are given by the MFIs to individual entrepreneurs for specific income generating micro enterprise/ small business activities.

  • Refinance Scheme for Commercial Banks / Regional Rural Banks (RRBs) / Small Finance Banks / Non Banking Financial Companies (NBFCs).

Different banks like Commercial Banks, Regional Rural Banks, Small Finance Banks and NBFCs are eligible to avail of refinance support from MUDRA for financing micro enterprise activities. The refinance is available for term loan and working capital loan up to an amount of  10 lakh per unit. The eligible banks/NBFC, who comply to the requirements as notified, can avail of refinance from MUDRA for the loans given by them for eligible MUDRA compliant activities under Shishu, Kishore and Tarun categories. In order to encourage women entrepreneurs, the financing banks / MFIs may consider extending additional facilities, including interest reduction on their loan. At present, MUDRA extends a reduction of 25bps in its interest rates to MFIs / NBFCs, who are providing loans to women entrepreneurs.
Mudra loan is extended for a variety of purposes which result in income generation and employment creation. The loans are extended mainly for:

  • Business loan for Vendors, Traders, Shopkeepers and other Service Sector activities
  • Working capital loan through MUDRA Cards
  • Equipment Finance for Micro Units
  • Transport Vehicle loans – for commercial use only
  • Loans for agri-allied non-farm income generating activities, e.g. pisciculture. bee keeping, poultry farming, etc.
  • Tractors, tillers as well as two wheelers used for commercial purposes only.

Following is an illustrative list of the activities that can be covered under MUDRA loans:
1) Transport Vehicle
Purchase of transport vehicles for transportation of goods and passengers such as auto rickshaws, small goods transport vehicles, 3 wheelers, e-rickshaws, taxis, etc. Tractors/Tractor Trolleys/Power Tillers used only for commercial purposes are also eligible for assistance under PMMY. Two Wheelers used for commercial purposes are also eligible for coverage under PMMY.
2) Community, Social & Personal Service Activities
Salons, beauty parlours, gymnasium, boutiques, tailoring shops, dry cleaning, cycle and motorcycle repair shops, DTP and Photocopying Facilities, Medicine Shops, Courier Agents, etc.
3) Food Products Sector
Activities such as papad making, achaar making, jam/jelly making, agricultural produce preservation at rural level, sweet shops, small service food stalls and day to day catering / canteen services, cold chain vehicles, cold storages, ice making units, ice cream making units, biscuit, bread and bun making, etc.
4) Textile Products Sector / Activity
Handloom, powerloom, khadi activity, chikan work, zari and zardozi work, traditional embroidery and hand work, traditional dyeing and printing, apparel design, knitting, cotton ginning, computerized embroidery, stitching and other textile non garment products such as bags, vehicle accessories, furnishing accessories, etc.
5) Business loans for Traders and Shopkeepers
Financial support for on lending to individuals for running their shops / trading & business activities / service enterprises and non-farm income generating activities with beneficiary loan size of up to  10 lakh per enterprise / borrower.
6) Equipment Finance Scheme for Micro Units
Setting up micro enterprises by purchasing necessary machinery / equipments with per beneficiary loan size of upto  10 lakh.
7) Activities allied to agriculture
‘Activities allied to agriculture’, e.g. pisciculture, bee keeping, poultry, livestock-rearing, grading, sorting, aggregation agro industries, diary, fishery, agri-clinics and agribusiness centres, food & agro-processing, etc.(excluding crop loans, land improvement such as canal, irrigation and wells) and services supporting these, which promote livelihood or are income generating shall be eligible for coverage under PMMY in 2016-17.
MUDRA Card is a debit card issued against the MUDRA loan account, for working capital portion of the loan. The borrower can make use of MUDRA Card in multiple drawals and credits, so as to manage the working capital limit in cost-efficient manner and keep the interest burden minimum. MUDRA Card also helps in digitalization of MUDRA transactions and creating credit history for the borrower. MUDRA Card can be operated across the country for withdrawal of cash from any ATM / micro ATM and also make payment through any ‘Point of Sale’ machines.

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