How to get a business loan with a low CIBIL score?

How to avail business loans

When you are the owner of your business, you realize how difficult it really is. Not only do you need to work for extended hours but you also need to make sure that everything is functioning the way that it is supposed to. Add to it the frequent national as well as international trips that you have to take in order to acquire new customers and finalize terms with vendors. On top of it, there is the problem of arranging funds for normal functioning of different business operations.

Usually, a business is supposed to generate cash from its daily operations, but in reality, it is not that easy. Sometimes urgent expenses come up, or your payments are delayed unexpectedly, but your financial requirements are not subject to your payments being realized. In order to enjoy an excellent reputation in the market, it is important for you to make your payments on time. In such a scenario, the best option that you can avail is to opt for a business loan. There are many financial institutions functioning in India that offer different types of business loans for various requirements of yours.

How to avail business loans?

Business Loans are offered by multiple financial institutions in India, banks as well as NBFCs, with a slight variation in the rate of interest. In general, a business loan is meant for business related requirements only such as the purchase of machinery, purchase of material, payment of taxes, payment of utility bills, etc.

With the rapid integration of technology in the financial services sector, it has become convenient for you to apply for a business loan. Use the online channels to acquire detailed information regarding various financing options and then file a business loan application online itself. When you file the application for a business loan online, you enjoy the benefits of prompt processing and quick disbursals. You only need to provide basic KYC and financial documents. There are various online business loan lenders and marketplaces also, where you can compare business loan products from different lenders and apply for the one which meets your requirements in the best possible manner.

About CIBIL Score

In order to bring transparency into the process of business loan sanction and approvals, most financial institutions now consider the CIBIL as the single biggest business loan eligibility determining factor. The CIBIL is nothing but your credit score determined by the CIBIL TransUnion credit bureau. This score is given out of 900 and is dependent on a number of factors. Ideally, lenders require the CIBIL Score for Business Loan Process to be over 700, to process your application further. In case your CIBIL score is below 650, then the chances for your business loan application being rejected increase significantly.

How to get a business loan with a low CIBIL score?

If your CIBIL score is below the required threshold, there is no need to be disheartened. It does not mean that you are not eligible for a business loan. There are many lenders, online as well as offline, who offer business loans for low CIBIL score applicants as well. Following is the important information that you need to know while applying for a business loan with the low CIBIL score:

    1. Do your research: Before you file your application for a business loan, make sure that you check your CIBIL score online and generate your credit report. Then go through the credit report and identify any errors that might have crept in. Then raise a dispute with the CIBIL, and if your claim is found to be right, then the said entry will be removed from your report, and your score would increase significantly.
  • Identify the lenders: Use the internet to find out about various lenders that offer business loans with low credit scores. There are many lenders who only give slight weight to the CIBIL and are willing to adjust on it if you can prove your financial strength otherwise. Also, some lenders have their own credit evaluation process. When you have identified such lenders, file your application with them only.
  • Strengthen your case: There are other factors in addition to the CIBIL that are also considered by lenders such as your age, savings, net worth, ownership of property, investment portfolio, insurance policies, business reputation as well. Make sure that all these factors are in your favor.
  • Ask for Insurance cover: Most lenders would be willing to overlook the low CIBIL Score for Business Loan Process if you can get an insurance cover to secure the business loan amount but be prepared to pay an extra interest rate as the risk factor for the lenders increase in case of the low CIBIL score.

Having a low CIBIL score is not the end of the world, you must follow these tips to strengthen your profile. In the meanwhile, work towards improving your credit score and take professional help if required for the same. A good CIBIL score is a key to a secure financial future.

Author Bio: – Rahul has over 7 years of experience in digital marketing. Prior to joining, Rahul worked at Content Mart and was instrumental in ensuring a 110% year on year growth of the business. Before this, he worked at Jabong as a part of the International Business Expansion team which focused on Overseas Markets. In the initial phase of his career, he worked with the auto portal where he achieved a 65% traffic scaling. Rahul holds a Bachelors degree in Technology.


I have been writing on tech since 2014 and what started as a side gig has now turned into a profession that I am immensely passionate about. A computer science graduate by education, I also enjoy reading and baking.

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