When applying for online business loans, one of the most important documents that you have to submit to the lenders is an ITR. ITRs help lenders determine the profitability of the business and assess if the business owners can pay back the loan amount. Additionally, since ITRs provide a more comprehensive understanding of the business’s financial risks, they help lenders better align the loan terms and conditions with the business’s repayment capacity.
ITRs are especially important for start-ups and small businesses that have not been active for a long time. Since they do not have a long credit history, in the absence of traditional checkers, ITRs become very important to assess a business’s financial state.
What is ITR?
An Income Tax Return (ITR) is a document that companies, individuals, trusts, partnerships, and other taxpayers submit to the tax authorities to disclose their income, deductions, and tax liability, if any. ITR documents help the government keep track of individuals’ and businesses’ income and check if they are paying appropriate taxes or not. If a business or individual refuses to file ITR, they may be liable to penalties and fines.
Can I get business loans without ITR?
While you can apply for online business loans without ITR, you will probably be paying high-interest rates. Most traditional banks and lending institutions require you to submit ITRs to evaluate your business’ profitability. An ITR reveals your business’ income, expenditures, and financial history. If you want lenders to sanction an online business loan with affordable interest rates and favorable repayment terms, you have to provide ITR details.
In some cases, if you have an excellent history of paying back debts and can show good CIBIL scores, some banks and NBFCs may approve your online business loan request. However, your other documents like bank statements, financial audits, and income-to-expense declarations should have no errors. You can consult an experienced professional like a business loan DSA agent from reputed financial institutions like ApnaPaisa to help you ensure your documents are in order.
In other words, while it is possible to avail of online business loans without ITR, you may have to submit additional documents, or it may result in unfavorable loan terms. As a new business owner, you may be too young to file ITR. Many public and private sector banks and NBFCs offer online business loans without ITR. If you are not satisfied with the loan terms, you may negotiate with your lending institution and discuss alternative financing options instead of online business loans if you are unable to provide ITR documents.
How to improve your chances of getting online business loans without ITR?
- Have excellent CIBIL scores: The best way to increase your chances of getting a business loan without ITR is to display an excellent credit history to back up your claim. If you have good CIBIL scores, you give off the impression of a reliable borrower.
- Apply for collateral: If you are having trouble securing an online business loan because of your poor repayment history, try taking a secured loan. Having collateral like a mortgage or gold will increase your chances of securing favorable loan terms. If you are unable to pay back the loan amount, lenders will extract the money from selling your collateral.
- Ensure your documents are in order: If you cannot produce an ITR, you have to make sure that all your other documents like your account audits, financial review, and business address proof contain updated information.
- Try getting a personal loan: Although personal loans are different from business loans, it is a good alternative for when you are unable to secure online business loans without an ITR. You can use personal loans for any purpose like buying equipment or hiring more employees. You can consult experienced personal loan DSA to help you plan your expenses more effectively.
- Ask for a co-borrower: If lenders are unwilling to let you avail of a large loan amount because of the lack of an ITR or due to your poor credit scores, you can ask for a co-borrower. Reach out to your friends, family, or business partner and apply for a loan together. Lenders will assess your co-applicants’ credit ability and sanction the loan amount.
Eligibility criteria to apply for online business loans
- Companies, individual sellers, manufacturers, partnerships, retailers, sole proprietors, cooperative societies, and limited liability partnerships (LLP) are eligible to apply for online business loans from any bank or NBFC.
- Start-up owners are also eligible to apply for business loans.
- One must be between 18 to 65 years of age at the time of loan application to avail of business loans.
- Depending on one’s credit profile, one can apply for a business loan of around INR 10,000 to INR 50 lakhs.
- A high credit score, at least above 700, is of utmost importance to avail of business loans.
- You do not have to submit collateral to apply for online business loans, except for letters of credit, equipment financing, and bill discounting.
Documents required to apply for online business loans
- Business loan application form
- Identity proof like Aadhar Card, Voter ID, PAN card
- Address proof like passport, driving license, utility bills
- Business address proof
- Passport-size photographs
- Most recent bank account statements
- Detailed business plan, credit statements, and financial statements for your lender
- Your company’s incorporation certificate
- Memorandum of Association, if your business is a partnership
- Rent agreement, if any
How to apply for online business loans?
Head to the bank or NBFC’s official website from where you want the business loan. Fill out their business loan online application form with all your personal and professional details. Submit the necessary identification proofs, financial statements, and address proofs. Make sure to display high CIBIL scores. If the lending institution approves your request, you will receive a notification. You may be called in to visit the physical branch of the institution or attend a virtual meeting to proceed with the loan application.