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Minimum CIBIL Score for Business Loans_WC

5 min 17 Apr 2023
Highlights:
  • What is the Minimum CIBIL Score for Business Loans?
  • How to Check CIBIL Score for Free?

Behind every successful start-up is an intelligent idea. However, it cannot be denied that when ideas do not get backed by proper funding, even the most creative minds may find themselves incapable of giving wings to these ideas. Working capital and an unrestricted cash flow are crucial for setting up businesses and making them profitable. Every company needs money to keep itself operational, hire staff that is aligned well with the company’s goal, acquire machines and technology that will help it grow and invest in its marketing to increase its visibility. Some start-ups and small companies get the backing of investors. However, not everyone who sets out to do business gets so lucky.  

People who need money for business expansion can avail of a loan against property for business. Business loans are loans designed to fulfil the working capital requirements of a small company. These loans can be used to cover temporary shortages, maintain cash flow, hire staff and acquire technology or equipment, etc.  

Also Read: Why Loan Against Property Can be a Good Credit Option for a Startup Business? 

Lenders assess the risk involved in lending money to a borrower by checking their CIBIL score. The CIBIL score is a three-digit number between 300 and 900 that indicates a borrower’s creditworthiness and repayment capacity. Credit information bureaus calculate a credit user’s CIBIL rating after taking into account several factors, such as the borrower’s past credit history, their credit exposure, the number of loans they have applied for in the recent past, the credit mix they have, etc. The closer a person’s CIBIL score is to 900, the higher their chances of getting approved for a loan.   

What is the Minimum CIBIL Score for Business Loans?

Any lender will offer you credit only when you meet their CIBIL score for a business loan and other requirements. Lenders are very specific about borrowers meeting their set qualifying criteria for loans. Borrowers who do not meet the eligibility requirements set by their lender often face rejection. So, what is the minimum CIBIL score for business loans? Lenders require borrowers to have a CIBIL score of at least 750. You may be able to avail of a Loan Against Property for your business even if your credit score is close to 700. However, the terms and conditions of the loan will not be favourable.  

Here’s how a CIBIL score of 750 can prove helpful when applying for a business loan.  

Quick Approval : 

If you are applying for a business loan, in all likelihood you have a great idea and you want to put it into action as soon as possible. You need money and you need it quickly. A good CIBIL score ensures quick business loan approval.

Low Rates of Interest :

One of the key factors that affect the cost-effectiveness of a loan is the rate of interest offered. Low-interest rate loans are easy to repay as they have low EMIs. Further, a low rate of interest also reduces the total interest pay-out and therefore, decreases the overall cost of borrowing the loan. A CIBIL score of 750 is the mark of a highly creditworthy borrower. Borrowers know that such a borrower is highly unlikely to miss EMI payments. Therefore, lenders sanction loans to such borrowers at low-interest rates.

High Negotiating Power :

A CIBIL score of 750 and above makes one an ideal borrower and therefore, borrowers with such a CIBIL score have high negotiating power. If your free CIBIL score check delivers a result of 750, you can negotiate better with your lender and ask them for better terms and conditions on your loans, such as lower interest rates, higher loan sanctions, longer repayment tenor, etc.  

Also Read: Tips to Maintain Your Business CIBIL Score Above 700 

For all these reasons and more, borrowers planning to avail of a business loan must make sure they have a CIBIL score of at least 750 before beginning the loan application. If they do not have such a credit rating, they must work on improving their credit report first and then apply for a loan. Practising financial discipline is the only thing that can help one better their CIBIL score over time. Pay your EMIs and credit card bills on time, reduce credit exposure, limit new credit card and loan applications, etc. Doing so will  

Now that we know the minimum CIBIL score for business loans and the benefits that come with such a loan, let us look at how to check the CIBIL score for free.  

How to Check CIBIL Score for Free?

These days, many websites allow borrowers to check their credit scores for free. However, we recommend going to the official website of CIBIL and following these steps for a free CIBIL score check.  

  1. On the official website of CIBIL, select ‘Get your CIBIL Score’ 
  2. During the next step, you will be required to enter details, such as your name, phone number, email ID, password, ID proof details, PIN Code, date of birth, etc.  
  3. Enter these details and select ‘Accept and Continue’ 
  4. Once you do this, you will receive an OTP on your phone, enter this OTP and select ‘Continue’ 
  5. After you do this, select ‘Go To Dashboard’ on the next pop-up window.  
  6. Doing this will take you to myscore.cibil.com 
  7. Click ‘Member Login’ and you will be able to see your CIBIL score

If you have a great idea, do not think twice about funds. These days, many banks and NBFCs offer small business loans that specifically cater to the needs of small businesses. Further, lenders charge an affordable interest rate on these loans. However, you will be offered the most lucrative business loan deals only if your CIBIL score is at least 750. So, before beginning the loan application process, do a free CIBIL score check. If your CIBIL score is below 750, delay applying for the loan. First, work on your CIBIL score, take measures to push it into the very good or excellent category and then apply for a business loan.  

Also Read: How to Check, Calculate, and Improve CIBIL Score? 

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