Table of content
- Introduction
- Loan Options Without ITR
- Eligibility Criteria Requirements
- Documentation and Application Process
- Conclusion
Introduction
Expanding a business sometimes calls for huge financial assistance, sometimes business loans can be of great support in such scenarios. Now, what if you don’t have an Income Tax Return? In India, ITR is often one of the most important documents lenders check before giving their approval for an MSME loan. But do not worry, because some loan options will still be available with ITR. Let’s know how!
Also read: Different Types of Loans Available in India
Loan Options Without ITR
Though most of the traditional banks in India ask for ITR to check your repayment capacity, there are other loan options that do not necessarily require ITR:
- NBFCs and Private Lenders: NBFCs and private lenders are less stringent than the traditional banks. They provide loans even without ITR requirements. So apply for business loan and fulfill your business financial needs.
- Collateral-Based Loans: If you have some collateral, be it property, gold, or any other valuable asset, then the lender might approve your loan without checking your ITR.
- Government schemes: Government schemes like Pradhan Mantri Mudra Yojana provide you with loans with not very stringent ITR requirements. Along with that, they also help you with flexible tenures and repayment plans.
- Invoice Financing: If you have outstanding invoices from your business, you can borrow money using the invoices. The lender is more interested in your invoices rather than your ITR. So make sure to maintain all those invoices accordingly and accurately.
- Business Credit Cards: They are excellent for short-term expense management. Certain credit cards are given without an ITR, especially to businesses that enjoy a good relationship with banks.
Also read: Loan Apps Make Loan Repayment Convenient and Simple
Eligibility Criteria Requirements
Some basic qualifying eligibility needs to be completed, in case you do not have an ITR for a business loan. Here are the usual ones:
- Business Stability: Lenders generally require that your business has been in operation for at least 1-2 years. So that you can verify your overall business stability, documents, completed projects, etc.
- Satisfactory Credit Score: A good credit history or credit score can make easy loan availability, even without the ITR document, as it is a fundamental requirement for any lending authority. Make sure to cross-check and confirm from time to time whether everything is in place or there’s some error with the CIBIL report so that you start working on rectifying it as well.
- Banking Records: Consistent deposits and transactions in your business account can show lenders that you are earning enough money. This makes your lender believe that you are maintaining good financial management and you can pay back the EMI amount after the loan amount is provided.
- Proof of Income: In case you do not have an ITR, you will have to submit other proofs of income like sales receipts, GST filings, new project documents, profit statements, etc.
- Guarantor or Collateral: A few lenders might give you a loan if you offer a guarantor or pledge some collateral to secure the loan and the lender to trust in you to provide you with the loan.
Documentation and Application Process
In case you are looking for a business loan without ITR, you need to provide alternative supporting documents. The following are steps you can undertake:
- Collect Alternative Documents: Gather documents that may replace ITR. These are;
- GST returns
- Bank statements (6-12 months)
- Sales invoices
- Proof of registration of the business
- PAN Card and Aadhaar Card
- Proof of address of the business
- Select Your Lender: Research and compare lenders that do not require ITR. Good places to start are NBFCs, private lenders, and government schemes.
- Submit the Loan Application: When selecting a lender, you should fill up the loan application form accurately. All details regarding your business must be correct.
- Provide Collateral (if needed): You can also pledge assets such as property or gold as collateral in case you apply for a secured loan. Ensure you attach proof of ownership to your application.
- Guarantor: The lender will verify your documents after receiving your business loan application. If the lender is not ok with your overall business loan application, you can discuss it with them and provide a guarantor, as a supporting person, so that the lender can trust and provide you with the loan.
Conclusion
It’s possible to get a business loan without ITR in India. However, such a process requires careful planning and preparation. You may consider options such as NBFCs, private lenders, collateral-based loans, or government schemes. To enhance your chances, you should have a good credit score, keep detailed banking records, and provide alternative proof of income. Although the process seems a bit complicated, it is all worth it. A business loan will give your business the money boost it needs to grow and prosper.
You can find the right loan for you even if you do not have ITR by approaching things in the right way. Especially for those business owners who do not have ITR, NBFCs are an excellent option. They are quite easy when it comes to lending and look at your business potential and other proofs of income, instead of ITRs. Their processing is quicker and hassle-free as compared to traditional banks.
