It is considered common for start-ups and manufacturers these days to avail of business loans in Chennai. This business loan can be either used as a capital investment or for expanding the business. However, it is essential for the enterprise to maintain a good score before availing of a business loan. Having a CIBIL score above 700 is considered the eligibility criteria to avail business loan in Chennai. For those enterprises or individuals who has CIBIL score below 700, a business loan can be availed only at a higher interest rate. However, the minimum CIBIL score for the business loan should be 300. Despite having a low CIBIL score, if you wish to obtain a business loan in a hassle–free way, there are few ways with which you can avail of a business loan.
Ways to get business loan with low CIBIL score
If you find your CIBIL score is acting as a barrier to avail business loan, here are some of the ways
1. Apply for a secured loan or choose a guarantee with high CIBIL score
If you are applying for a secured business loan, arrange for collateral as a form of security. Once the borrower submits the collateral, it is easy for the bank to sanction the loan despite the borrower having a low CIBIL score.
Another option is to request loans from private finances such as the RG enterprises. These private finances will have lenient policies for those persons seeking business loans with a low CIBIL score.
If you could find a guarantee with a high CIBIL score, the chances of getting a business loan with a low CIBIL score are also high.
2. Peer to peer lending
If you find it difficult to get a business loan because of your low CIBIL score, you can choose peer–to–peer lending. Though the amount of loans obtained by such entities is low, they do not demand any collateral. However, their interest rate is relatively higher compared to other loans.
3. Avail overdraft facility
By means of the overdraft, the lender can fix the credit limit and sanction the same. Based on the credit limit sanctioned, the interest rate is calculated. Once the credit limit is sanctioned, the CIBIL score holds value no more.
4. Micro Finance Institutions (MFI)
When the financial institutions are considered, they are mainly concerned about the repayment ability and the financial ability of the borrower is evaluated over the other things. If everything fits in the right place, then sanctioning the loan amount is not a difficult task. When compared to the public and private sector banks, the interest rate of these financial institutions is higher.
Despite having a low CIBIL score if you are having any additional source of income and if you are able to produce proof of it, getting your loan approved is not a difficult task.
On the other hand, if your business turnover is higher, then it is easy to get the loan amount approved.
If you choose to apply for joint loan, chances of availing the loan are high
The better option is to improve your credit score as a means to secure your financial status as credit score above 700 is considered the best by almost all the banks
Most of the private finances offer business loans based on the current financial status of the business and business capability. Thus, the CIBIL score alone is not the primary requirement to avail business loans in Chennai.