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- What is a good credit score to get a business loan?
A credit score of 700 and above is considered good for a business loan, which can get you lower interest rates.
- Can I get a business loan with a 500 credit score?
Yes, you can get a business loan with a 500 credit score though there are only a very few lenders who would be willing to lend to you. Also, the interest rate would be very high.
- How can I get a business loan with a 500 credit score?
An unsecured business loan may be difficult with a 500 credit score, but a secured business loan can be availed with such a low credit score. If you are a new business, it is better to establish your business and build your credit so that you have better approval chances for your business loan.
- What are some alternatives for business loans if I have a 500 credit score?
If you have a low credit score, you can opt for other types of business credits like –
- Line of Credit
- Personal Loans
- Merchant Cash Advances
- Crowdfunding
- Invoice Factoring
- Invoice Financing
- Equipment Financing
- Micro Loans
- Are there any government-backed finance schemes for businesses?
Yes, you can opt for government-backed lending options, when you have a low credit score of just 500. Some of the popular government schemes:
- MUDRA Yojana.
- The Credit Linked Subsidy Scheme.
- SMILE – Make India initiative
- The Credit Guarantee Fund Scheme for MSMEs.
- Mahila Udyami Yojana.
- How long would it take to reach a 700 credit score?
It may take a period of somewhere between 4 to 6 months to boost your credit score to 700.
- What are some measures to improve my credit score?
Fixing your credit score is a continuous process. The following measures can help you improve your credit score gradually:
- Pay off any long-standing loans
- Check your credit score for any errors
- Do not default on payments
- Limit your credit utilization
- Avoid multiple loan/ credit card applications
- Do instant loan apps check your credit score while processing a business loan?
Many instant loan apps do not check your credit score while processing a business loan so they may be a good option to try. However, the interest rate is very high with these instant loan apps. So applicants are advised to be careful while dealing with such instant loan apps.
- Is it advisable to apply for a business loan online?
Yes. Many banks and NBFCs are now offering online applications for business loans, in consideration of the pandemic. This is also a convenient way for loan applications and reduces the hassles of endless documentation.
- What factors do the lenders look for during a business loan application?
Given below are the most common eligibility criteria for a business loan:
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Eligible Entities |
Self-employed individuals, Proprietors, Private Ltd. Companies and Partnership Firms |
|
Age Criteria |
Min. 18 years and Max. 65 years |
|
Age of the Business |
Minimum two years of making a profit. |
|
Annual Turnover |
Minimum Rs.25 lakhs |
|
Credit Score |
700 and above |