How can you get a business loan without ITR?

Most financial institutions will ask you to produce your previous Income Tax Returns (ITR) when you apply for a business loan. But not every individual falls under the tax slabs as per their annual income. More importantly, many emerging business owners do not have enough experience in filing ITR. They may be unaware of this Income Tax requirement. Some may consider that it’s too early for their business to file an ITR, although there is no such thing.

This narrows down your business loan options but does not mean that you are not qualified to get one.

Top five ways of getting a business loan without ITR

  1. Have proper documents – While enquiring for a business loan, you can demonstrate your preparedness by furnishing all necessary documents. Depending on the type of your business entity, such documents may include,
  • Application form, duly filled
  • Proof of identity
  • Proof of address
  • Bank account statements for the last six months
  • Cheque issued for processing fee payment
  • Passport-sized photographs
  • Company’s Incorporation Certificate/AoA
  • Partnership deed or MoA
  • Trade license etc.
  • Property documents, if you are providing security. Mortgage increases the chances of a business loan without ITR.
  1. Healthy Credit Score – If you have kept your credit score high, you stand a chance of getting a business loanwithout filing ITR. Try to keep your credit score above 700. The closer it is to 900 the better your chances of getting your loan sanctioned.
  2. Look for probable lenders

Although traditional lenders insist on ITRs, you can look for lenders who are easily approachable for securing a business loan without ITR. In the absence of an ITR, you will get the loan, but the business loan interest rate might be higher than usual.

  1. Avoid existing loans and payment defaults

When you are applying for a business loan for the future, make sure there are few or no pending loans to repay. Excessive liability and defaults thereon may bring in a bad name as a creditor and harms your business loan eligibility.

  1. Maintain your banking transactions

If you maintain high-value bank account statements along with regular savings, it will improve your chances of getting your business loan approved without ITR. This gives assurance to the lender that there are no chances of default in the business loan.

It is essential to file Income Tax Return every year to know how much you owe in taxes, and the tax refund you need to receive. ITR also helps you to document the profitability of your business and monitor it better. But until then, you can avail of a business loan without ITR and ensure your business grows. Make sure you check out the different loan providers and use a business loan EMI calculator to understand how much you would owe to make the right decision.