Business loan eligibility: an indicative self-check
There is no single eligibility formula followed by all banks. Lenders assess cash flows, business stability, existing obligations, credit conduct, security and product-specific policy. This calculator gives a repayment-capacity illustration, not a sanctioned or pre-approved loan amount.
Simplified method: affordable new EMI = max(0, monthly available cash ÷ target coverage factor − existing EMI). Loan principal is the present value of the affordable EMI at the assumed interest rate and term. This is not a bank's complete DSCR computation and excludes taxes, seasonality, promoter withdrawals and other lender-specific adjustments.
What banks typically examine
- Business vintage and cash flow: stability of operations and realistic repayment sources
- Financial statements: turnover, profitability, liquidity and existing liabilities
- Credit history: repayment conduct, bureau records and existing borrowing
- Purpose and margin: how the loan will be used and the borrower's contribution
- Security or guarantee: depends on product and eligibility
Explore our loan eligibility and documents guide, DSCR calculator and EMI calculator.
Worked illustration
Suppose a business has ₹1,20,000 monthly cash available before debt servicing, existing EMIs of ₹25,000 and an illustrative coverage factor of 1.25. The amount potentially available for a new EMI under this simplified approach is ₹1,20,000 ÷ 1.25 − ₹25,000 = ₹71,000 per month. The equivalent principal depends on interest rate and tenure.
Frequently asked questions
Does this determine bank approval?
No. A bank can approve a different amount, request security, or decline a proposal based on its full assessment.
Can this be used for cash credit limits?
No. Revolving working capital limits require separate assessment of the operating cycle, inventory, receivables, margin and drawing power.
Does a high credit score guarantee eligibility?
No. Credit conduct is one factor among several.