5 Common Challenges in Securing a Business Loan in India

Imagine, you are planning to apply for a business loan to expand your shop, buy new machinery, or manage working capital. Everything seems ready. Then you check your credit score and suddenly, it dropped. No warning. No clear reason. Just a lower number staring back at you. 

For many Indian business owners, this moment is confusing and stressful. You may wonder, “I’ve been running my business honestly, so why did this happen?” The truth is that a credit score can drop suddenly due to small financial actions that often go unnoticed. 

The good news is this: a credit score drop is common, understandable, and fixable. Once you know the reasons behind it, you can protect your score and even rebuild it over time. 

In this blog, we will explain what a credit score really is, why it matters so much for business loans, the most common reasons behind a sudden drop, and practical ways to protect your credit score as a business owner. 

You can read this blog to know about “Why Your Credit Score Decreases?” 

What Is a Credit Score and Why It Matters for Business Owners 

Read full Blog on this. 

A credit score is a three-digit number that shows how responsibly you handle loans and credit. In India, credit scores usually range from 300 to 900. The higher your score, the safer you look like a borrower. A lower score signals risk. 

This score is calculated based on your repayment history, how much of your available credit you use, how long you have been using credit, and how often you apply for loans or credit cards. Over time, these factors come together to form your financial track record. 

For business owners, a credit score is more than just a number. It directly affects your ability to get a business loan. Lenders don’t only judge your business idea or turnover; they also check your credit score, especially for MSMEs, startups, and self-employed professionals where personal and business finances are closely connected. 

Your credit score decides whether your loan gets approved, how much interest you pay, and how flexible your repayment terms are. 

What Causes a Sudden Drop in Credit Score? 

Credit score rarely drops without reason. In most cases, it is triggered by one or more common financial behaviors. Let us understand them one by one. 

Missed or Delayed EMI Payments 

This is the most common reason behind a sudden drop. Even a single missed EMI can affect your credit score. Many business owners assume that a delay of a few days does not matter. But if your EMI crosses the due date and is reported as late, it can damage your score. A delay of 30 days hurts, 60 days hurts more, and repeated delays create a strong negative impact. 

For example, if your EMI was due on the 5th and got paid on the 10th, it may still be marked as late. Over time, these small delays add up. 

High Credit Utilization 

Credit utilization means how much of your available credit limit you are using. If you are using too much of your credit card limit or overdraft facility, your score may fall. Many business owners use credit cards to manage daily expenses. While this is normal, constantly using 80–90% of your limit signals financial stress to lenders. 

For instance, if your credit card limit is ₹2,00,000 and you regularly use ₹1,80,000, your score may drop even if you pay on time. 

Applying for Multiple Loans or Credit Cards Together 

When you apply for a loan or credit card, the lender checks your credit report. This is called a hard enquiry. Too many hard enquiries in a short period can reduce your score. This often happens when business owners urgently need funds and apply to multiple lenders at once, hoping at least one will approve the loan. Unfortunately, this approach backfires. 

Lenders may see this behavior as desperation or financial instability, leading to a sudden score drop. 

Loan Settlement or Restructuring 

Many people believe that settling a loan is better than missing payments. While settlement may offer temporary relief, it negatively impacts your credit score. 

A “settled” loan means you did not repay the full amount as agreed. Credit bureaus treat this as a negative event. Even restructuring a loan during financial stress can affect your score. 

Errors in Credit Report 

Sometimes, your credit score drops due to reasons that are not even your fault. Errors in credit reports are more common than most people think. Examples include: 

• A loan shown as unpaid even after closure 

• Incorrect outstanding balance 

• EMI delays wrongly reported 

If these errors are not checked and corrected, they can silently damage your credit score. 

Long-Inactive Credit Accounts 

Old credit accounts help build a longer credit history. When you close old credit cards or accounts, the length of your credit history reduces, which may lower your score. 

Many business owners close unused cards, thinking it is of no use. But keeping old, well-managed accounts active actually helps your credit profile. 

Becoming a Loan Guarantor 

When you become a guarantor for someone else’s loan, that loan reflects your credit profile, too. If the borrower misses EMIs or defaults, your credit score gets affected even if you have not taken the loan yourself. This often happens with business partners, friends, or relatives. 

How to Protect Your Credit Score as a Business Owner 

Protecting your credit score is easier than fixing it later. A few disciplined habits can go a long way. 

Pay EMIs on Time, Always 

Set up auto-debit instructions wherever possible. Keep sufficient balance in your account to avoid failed payments. Even one missed EMI can undo months of good credit behavior. 

Keep Credit Utilization Low 

Try not to use your entire credit limit. As a thumb rule, use only what you truly need and keep some buffer. This shows financial control and stability. 

Avoid Multiple Loan Applications 

Instead of applying to many lenders at once, check your eligibility first. A focused and planned approach protects your credit score and improves approval chances. 

Check Credit Report Regularly 

Review your credit report at least a few times a year. Early detection of errors allows quick correction before serious damage occurs. 

Be Careful with Loan Settlements 

Settlement should be the last option. If possible, talk to lenders about restructuring or temporary relief that does not harm your credit profile as much. 

How Long Does It Take to Recover from a Credit Score Drop? 

Recovery depends on the reason behind the drop. Minor issues like high utilization can improve within a few months. Missed payments or settlements may take longer. 

The key is consistency. Paying EMIs on time, reducing outstanding balances, and avoiding risky behavior slowly rebuilds trust in your credit profile. 

Credit scores do not improve overnight, but with discipline, recovery is always possible. 

How TallyCapital Helps You Get Business Loans Even with Credit Challenges 

Many business owners avoid checking their credit score because they fear it might reduce the score further. This is a common myth. Checking your own credit score is known as a soft check, and it does not impact your credit score in any way. 

When you check your credit score regularly through TallyCapital, you stay informed about where you stand financially. More importantly, you get early warnings. If your score drops due to high credit usage, a missed payment, or even a reporting error, you can spot it quickly and take action before it affects your business loan plans. 

TallyCapital does more than just show you a number. It helps you understand why your score looks the way it does. You get clear insights into what is helping your score and what may be pulling it down. This allows you to make smarter decisions, such as paying outstanding balances, avoiding unnecessary loan applications, or correcting errors in your credit report. 

Regular credit score monitoring builds awareness. And awareness is the first step toward improvement. 

FAQs 

Can a credit score decrease suddenly even if I paid all EMIs on time?
Yes. High credit utilization, multiple loan enquiries, or report errors can still cause a drop. 

How many points does a missed EMI reduce?
It varies, but even one missed EMI can reduce your score by several points, depending on your overall credit profile. 

Does checking my own credit score reduce it?
No. Checking your own score is a soft enquiry and does not affect your credit score. 

Can I get a business loan with a low credit score?
Yes, but options may be limited. Interest rates may be higher, and eligibility conditions stricter. 

How often should business owners check their credit score?
At least two to three times a year, or before applying for any loan. 

Conclusion 

A sudden drop in your credit score can feel alarming, especially when your business depends on timely funding. But in most cases, the reasons are simple and manageable. Understanding what affects your credit score gives you control. With timely payments, careful credit usage, and regular monitoring, you can protect and rebuild your score steadily. 

Remember, a credit score is not a judgment. It is a reflection of habits and habits can always be improved. With the right awareness and support, your business finances can stay strong and future ready. 

Taking a business loan is often a turning point for an entrepreneur. From running a small retail store to managing a factory, launching a startup, or offering professional services, every business needs money to move forward. Funds are required for stocking goods, managing cash flow, growing operations, or even meeting daily business expenses. 

However, the reality many businesses owners encounter is quite disappointing.
In India, a significant number of business loan applications are turned down. 

What makes the situation worse is the lack of clarity. Most lenders do not clearly explain the reason behind the rejection. As a result, business owners are left feeling confused, anxious, and uncertain about where they went wrong. 

What Is a Business Loan? 

A business loan is financial support provided by banks or NBFCs to support business-related needs like purchasing raw material, managing cash flow, buying machinery, opening a new branch, hiring staff, or even handling seasonal demand. 

Business loans can be secured or unsecured. Many MSMEs prefer unsecured business loans because they do not require collateral. However, these loans come with stricter eligibility checks.

Read more about Business Loans here

Why Business Loan Applications Get Rejected 

Lenders follow a set process and assess multiple factors before approving a loan. Let’s understand the most common reasons behind rejection. 

Low Credit Score 

Your credit score is one of the first things lenders check. It reflects how you have handled past loans and credit cards. In India, a credit score below 650 is often considered risky. If your score is low due to missed EMIs, defaults, or overuse of credit cards, lenders may reject your application. 

For example, if you missed EMI payments during a slow business period, it stays on your credit report and impacts future approvals. 

Inconsistent Business Income 

Lenders want to see stable income. If your business shows large ups and downs in monthly revenue, it raises concerns. Seasonal businesses, cash-heavy operations, or irregular billing can sometimes look risky on paper, even if the business is doing well in reality. 

If bank statements do not reflect steady cash flow, approval becomes difficult. 

Poor Banking Transactions 

Your bank statement tells a story about your business habits. Frequent cheque bounces, low average balance, or sudden large withdrawals can negatively impact your application. 

Many business owners focus only on sales but ignore how their bank account looks. Lenders notice both. 

Incomplete or Incorrect Documents 

Missing or incorrect documents is a very common reason for rejection. Even a small mismatch in PAN details, GST data, or business address can delay or reject a loan. Submitting outdated ITRs or unclear financial statements also creates problems. 

High Existing Loan Burden 

If you already have multiple loans running, lenders may feel you are overleveraged. 

For example, if a large portion of your monthly income is already going towards EMIs, adding another loan increases the risk of default. Even if your business is profitable, this factor alone can lead to rejection. 

New or Unregistered Business 

Many startups and new businesses apply for loans too early. If your business is less than one year old or not properly registered, lenders find it difficult to assess its stability. Most traditional lenders prefer at least 2–3 years of business history. 

GST and Tax Compliance Issues 

Irregular GST filings or delays in income tax returns raise red flags. 

Lenders cross-check GST returns with bank statements and financials. Any mismatch or non-compliance creates doubt about the authenticity of business income. 

Asking for the Wrong Loan Amount 

Sometimes the problem is not your profile, but the loan amount you request. If your income supports a loan of ₹5 lakh but you apply for ₹20 lakh, rejection is likely to happen. Lenders calculate eligibility based on turnover, profit, and repayment capacity. 

What You Can Do to Avoid Business Loan Rejection 

The good part is that most of these issues can be fixed with the right approach. 

• Start by checking your credit score regularly. Clear overdue EMIs and avoid taking unnecessary credit. Even a small improvement in score can make a big difference. 

• Maintain clean and healthy bank statements. Try to route most business transactions through your current account. Avoid frequent cash withdrawals and cheque bounces. 

• Keep your documents updated. File GST and ITR on time. Make sure business details are consistent across all records. 

• Apply for a loan amount that matches your actual eligibility. It is better to get a smaller loan approved than face rejection for a larger amount. 

• Most importantly, choose the right lander. Different banks and NBFCs have different risk appetites. Applying blindly to multiple lenders only hurts your credit profile further. 

How TallyCapital Helps You Get Business Loan Approval 

At TallyCapital, we don’t believe in a one-size-fits-all approach. Every business is different, and so is its funding requirement. We start by understanding your business, income flow, credit profile, and loan requirement. Based on this, we match you with lenders who are most likely to approve your application, and then your documents get checked online before submission. This reduces errors and avoids unnecessary rejections. 

If your credit score is weak, simple and practical guidance is given to improve it before applying. 

We also help you choose the right loan amount and tenure so that approval chances are higher and EMIs remain comfortable. Instead of trial-and-error applications, TallyCapital ensures a smarter, faster, and more transparent loan process. 

Frequently Asked Questions (FAQs) 

Why do banks reject business loan applications?
Banks reject applications due to low credit scores, weak income, poor documentation, or high existing debt. 

Can I get a business loan with a low credit score?
Yes, some NBFCs consider applications with lower scores if income and banking are strong. 

Is GST mandatory for business loan approval?
Not always, but GST strengthens your profile and improves approval chances. 

How long does business loan approval take?
With proper documents and the right lender, approvals can happen within a few days. 

Conclusion 

Business loan rejection can feel discouraging, but it is not the end of the road. In most cases, rejection happens due to small gaps that can be corrected with proper guidance. 

Understanding why loans get rejected is the first step. Preparing your profile the right way is the next. With expert support, the right lender, and a clear strategy, getting a business loan becomes much easier. If you want to avoid rejection and get funded with confidence, TallyCapital is here to help you at every step. 

Starting a business in India is exciting, but let’s be honest it is not easy. Every startup begins with an idea, passion, and big dreams, but here money comes as a challenge. Whether it is buying stock, hiring staff, renting office space, or marketing your product, funds are required at every stage. 

Traditionally, banks asked for collaterals such as property, land, or fixed deposits against business loans. But most startups and new entrepreneurs might not have these assets. That is why they prefer business loans without collateral, as they provide easy access to funding without risking personal or business assets, allowing founders to focus on growth rather than security requirements. 

At TallyCapital, we work closely with businesses to understand their financing challenges and offer loan options best suited to their needs. In this blog, we explain everything about collateral-free business loans in a simple and easy-to-understand way. 

What Is a Collateral Free Business Loan? 

A collateral-free business loan is a loan where you do not need to pledge any personal or business asset as security. You don’t have to mortgage your house, shop, or land. The lender approves the loan based on your business potential, income, credit history, and future growth prospects. 

These loans are also known as unsecured business loans and are widely used by startups, small businesses, and first-time entrepreneurs in India. 

Features and Benefits of Collateral-Free Business Loans 

Collateral-free business loans are designed to support growing businesses. Let’s understand why they are so popular among startups. 

No Asset Risk 

The biggest benefit is peace of mind. You are not risking your personal or family assets. Even if the business faces ups and downs, your property remains safe. 

Faster Loan Approval 

Since there is no collateral valuation or property verification, approval is much quicker. Many loans are approved within a few days if documents are in order. 

Easy Access for New Businesses 

Startups usually struggle to meet traditional bank requirements. Collateral-free loans focus more on income, bank statements, and business ideas, making them startup-friendly. 

Flexible Usage 

You can use the loan amount for multiple business needs like working capital, inventory purchase, marketing, hiring, or even upgrading technology. 

Supports Business Growth 

With timely funding, startups can grab growth opportunities without waiting to accumulate assets. This is especially helpful in competitive markets. 

Builds Credit History 

Regular repayment of a collateral-free loan helps improve your business credit score. This makes future funding easier and cheaper. 

Top Government-Initiated Loan Schemes for Startups & MSMEs in India 

The Indian government actively supports entrepreneurship and small businesses. Several schemes have been launched to provide collateral-free funding. 

Pradhan Mantri Mudra Yojana(PMMY) 

Mudra loans are ideal for micro and small businesses. Loans are offered under three categories – Shishu, Kishor, and Tarun. It depends on the business stage. No collateral is required, and interest rates are affordable. 

This scheme is widely used by shop owners, service providers, traders, and startups at an early stage.

Credit Guarantee Fund Trust for Micro and Small Enterprises(CGTMSE)

Under this scheme, the government provides a credit guarantee to lenders. This allows banks and NBFCs to offer loans without asking for collaterals. It is especially useful for manufacturing units, service businesses, and MSMEs looking for higher loan amounts. 

Startup India Scheme

This initiative supports recognized startups with easier access to funding, tax benefits, and credit guarantee support through partner institutions. 

Stand-Up India Scheme

Designed for women entrepreneurs and SC/ST founders, this scheme provides loans without collateral to help them start greenfield enterprises. 

 Eligibility Criteria for Startup Loans Without Collateral 

While collateral is not required, lenders still check certain basics to ensure repayment capability. 

• First, the applicant should be an Indian citizen and at least 21 years old. Most lenders prefer applicants below 65 years at loan maturity. 
• Second, the business should be operational. Some lenders fund startups as new as 6 months old, while others may require at least 1 year of business history. 
• Credit scores play an important role. A score above 650 increases approval chances.  
• Your business should show regular income through bank statements. Consistent cash flow builds lender confidence. 
• Lastly, the business should not be blacklisted or involved in legal disputes. Clean records always help. 

How to Apply for a Collateral-Free Business Loan for Startups 

Applying for a startup loan without collateral is much simpler today, especially with digital platforms like TallyCapital. 

Step-by-Step Application Process

• Assess your funding requirement carefully before applying. Avoid over-borrowing and choose an amount your business can comfortably repay. 
• Choose the right lender based on your business needs. Banks, NBFCs, and fintech platforms offer collateral-free loans, each with different eligibility criteria and interest rates. 
• Get support from TallyCapital. It compares multiple lenders and matches your business profile with the most suitable loan option, saving time and improving approval opportunities. 
• Submit your loan application online. Upload basic documents for verification and lender evaluation. 
• Receive the loan amount directly to your bank account. Once approved, funds are disbursed quickly within just a few days. 

Documents Required for Startup Loan Application 

Documentation is simple but very important. Keeping all papers ready helps with faster loan approval. 

Personal Documents 

• Aadhaar Card 
• PAN Card 
• Address Proof (Voter ID, Passport, or Utility Bill) 

Business Documents 

• GST Registration Certificate (if applicable) 
• Shop Act License 
• Business Incorporation Certificate (for Pvt Ltd, LLP, or Partnership firms) 

Financial Documents 

• Last 6 to 12 months bank statements 
• Basic income and cash flow details 

Additional Documents (if required) 

• Income Tax Returns (ITR) 
• Business financial statements such as Profit & Loss or Balance Sheet 

At TallyCapital, we guide you step by step through documentation, so there is no confusion or delay in your loan process. 

Conclusion 

Collateral-free business loans have transformed how startups grow in India. You no longer need property or heavy assets to turn your idea into a successful business. With government support, NBFC innovation, and digital lending, funding is now faster and more accessible than ever. 

If you are a startup founder or MSME owner looking for stress-free funding, collateral-free business loans are worth exploring. And with TallyCapital by your side, the process becomes even simpler, transparent, and reliable. 

When a business owner applies for a business loan, lots of questions arise, and the first question that usually comes to mind is – How much interest will I pay on the loan amount?
And honestly, that’s a very valid question. 

Business loan interest rates are not random. They are decided after checking multiple things related to your business and financial behavior. Many business owners feel confused when they see different interest rates offered to different people, even for the same loan amount. 

In this blog, we’ll explain what factors affect business loan interest rates, in very simple words, so by the end, you’ll know exactly what impacts your loan cost and how you can get a better interest rate. 

What Is a Business Loan Interest Rate? 

A business loan interest rate is the extra amount you pay to the lender for using their money. It is usually charged as a percentage on the loan amount and can be calculated monthly or yearly. 

For example, if you take a loan of ₹10 lakh at 14% interest, you will repay the principal plus interest over the chosen tenure. Lower interest means lower EMIs and less burden on your cash flow. 

Factors Affecting Business Loan Interest Rates 

Credit Score 

Your credit score is one of the biggest deciding factors for your business loan interest rate. 

In India, credit scores usually range from 300 to 900. This score shows how disciplined you have been with past loans and credit cards. Have you paid EMIs on time? Have you defaulted? Have you used too much credit? 

If your credit score is above 750, lenders see you as a responsible borrower. This often results in lower interest rates and better loan terms. If your credit score is low, the lender feels there is a higher risk of delay or default. To compensate for this risk, they charge a higher interest rate. 

Example:
Two shop owners apply for a ₹5 lakh loan. One has a credit score of 780, the other has 620.
The first may get a loan at 12%, while the second may be offered 18%. 

Business Vintage (How Old Your Business Is) 

How long your business has been in the long run has also played an important role. 

A business that has been operating successfully for several years is considered more stable. It has already faced market ups and downs and survived. Lenders trust such businesses more. New businesses or startups usually have limited financial history. Because of this uncertainty, lenders often charge higher interest rates. 

If your business is older than 3 years, you generally have better chances of getting a loan at a competitive interest rate. 

Business Financials and Turnover 

Your sales, profits, and bank statements show how strong your business is financially. 

Lenders check your bank statements, sales figures, GST returns, and profit margins. If your business shows consistent turnover and stable profits, lenders feel confident that you can repay the loan on time. 

On the other hand, if your income is irregular or profits are very thin, the lender may increase the interest rate to cover the risk. 

Simple logic: Stronger business = lower risk = better interest rate. 

Even small improvements in financial reporting and regular banking activity can help you negotiate better terms. 

Type of Business 

The nature of your business also impacts the rate. 

Some businesses are considered safer, like retail stores, manufacturing units, or service-based businesses. Others, like seasonal or high-risk industries, may attract slightly higher interest. 

Lenders assess how stable and predictable your business income is before finalizing the rate. 

Loan Amount

The loan amount you choose also impacts the interest rate. 

A higher loan amount increases the lender’s exposure. In some cases, this can result in a slightly higher interest rate, especially if the business profile does not strongly support the amount requested. 

However, if your business financials are strong, a higher loan amount may help you negotiate better rates due to economies of scale. 

Choosing the right loan amount based on actual business needs is always smarter than borrowing more than required. 

Loan Tenure 

Loan tenure refers to how long you take to repay the loan. 

Shorter tenure loans usually carry lower interest rates because the risk period is smaller. However, EMIs are higher. Longer tenure loans reduce EMI pressure but may come with slightly higher interest rates and higher total repayment. 

The best option is a balanced tenure where EMIs are comfortable, and interest costs remain reasonable. 

Type of Lender 

Different lenders have different risk appetites. 

Banks usually offer lower interest rates, but they have strict eligibility criteria and longer approval timelines. NBFCs and digital lenders offer faster approvals, flexible documentation, and customized loan options. Interest rates vary based on your business profile rather than just rigid rules. 

Choosing the right lender is crucial. The cheapest interest rate is not always the best option if the process is slow or complicated. 

Why Choose TallyCapital for a Business Loan? 

Finding a business loan should not feel overwhelming. That’s exactly why TallyCapital exists. 

TallyCapital understands the real challenges faced by Indian small business owners. Instead of judging your business only on paperwork, they focus on your actual business performance. 

With TallyCapital, you don’t have to run from one lender to another. You get access to multiple lender offers that are suited to your credit profile and business needs. 

The process is simple, transparent, and quick. Documentation is minimal, approvals are faster, and there are no confusing surprises. 

Most importantly, it works to help you secure the best possible interest rate, not just any loan. 

Whether you need funds for expansion, inventory purchase, working capital, or cash flow support, TallyCapital makes the journey smooth and stress-free. 

Conclusion 

Business loan interest rates are influenced by many factors, not just one score or any document. 

Your credit score, business stability, financial performance, cash flow, loan requirement, and lender choice all come together to decide how much interest you will pay. 

The good part is that many of these factors are within your control. Improving financial discipline, maintaining proper records, and choosing the right lending partner can significantly reduce your borrowing cost. 

A business loan, when taken wisely, can fuel growth instead of becoming a burden. Understanding interest rates is the first step in making the right decision. 

FAQs 

1. What is the average business loan interest rate in India?
   Business loan interest rates in India generally start from around 11% and can go up to 24%, depending on the lender and borrower profile. 
2. Can I get a business loan without a high credit score?
   Yes, it is possible. However, interest rates may be higher. TallyCapital helps to match your profile with suitable lenders. 
3. Does GST file impact interest rates?
   Yes. Regular GST filing shows consistent business activity and improves lender confidence. 
4. How can I lower my business loan interest rate?
   Maintain a good credit score, keep financial records clean, choose the right loan amount and tenure, and apply through a trusted platform like TallyCapital.

Running a small business in India? then you must have heard this line before: 

“Sir your loan will not get approved because your credit score is less” 

For many business owners, this becomes a shock. Sales are good, business is running, cash flow is coming in, so why is a credit score stopping a business loan? 

The truth is simple. Today, your credit score plays a huge role in deciding whether you get a business loan, how much you get, and at what interest rate. And yet, most small business owners don’t fully understand how it works. This credit score guide for business owners will help you understand credit score better. 

What Is a Credit Score for Small Business Owners? 

A credit score is simply a number that shows how responsibly you handle borrowed money. In India, this score usually falls between 300 and 900, and it plays a much bigger role in business loans than most owners realize. 

Here’s an important point many small business owners miss. Even when you apply for a business loan, lenders usually check their personal credit score first. This includes your past home loans, personal loans, credit cards, and even BNPL or pay-later accounts.  

The reason is straightforward. In small businesses, the owner and the business are closely connected. If personal EMIs are missed or delayed, lenders assume there is a higher risk that business loan repayments may also be affected. That’s why your personal financial habits directly influence your business loan approval. 

Now let’s talk about what score works in your favor

A credit score above 750 is generally considered good for business loans because it gives lenders confidence in their repayment ability and usually helps you get better interest rates.  

When your score touches 800 or more, you move into a very strong position and are seen as a preferred borrower, which means easier approvals and more flexible loan terms. If your score falls between 650 and 749, getting a loan is still possible, but you may face higher interest rates or a reduced loan amount. Scores below 650 make approvals difficult and significantly limit your options. While there is no such thing as a perfect credit score, anything above 800 places you among the safest borrowers in the eyes of lenders. 

Why Small Businesses Need a Good Credit Score 

A good credit score is not just about getting a business loan approved. It influences the interest rate you pay and the amount you receive. Even with healthy turnover, a low score can lead to rejection or costly terms. On the other hand, a strong credit score builds lender confidence, helps you secure lower interest rates, higher loan limits, and makes borrowing smoother and less stressful overall. 

How Credit Score Affects Business Loan Eligibility  

Let’s understand this with a quick example 

Rohit and Amit both run similar businesses and apply for a ₹10 lakh loan.  

Rohit has a credit score of 780, so he gets a lower interest rate of 14% and an EMI of around ₹23,300. Amit’s credit score is 620, and because of that, his interest rate goes up to 22%, making his EMI nearly ₹27,600. The loan amount and tenure are the same, yet Amit ends up paying thousands more every month. This is the real cost of ignoring your credit score. 

Common Reasons Why Small Business Credit Scores Drop 

• Most of the time, credit scores don’t fall because of big mistakes. It drops due to small habits repeated over time, such as missing or delaying EMIs. Even one or two late payments can hurt badly. 
• Overusing credit cards is another issue. When your card is always close to the limit, it signals financial pressure. 
• Too many loan enquiries in a short time also reduce your score. Applying everywhere out of desperation often backfires. 
• Lastly, mixing personal and business expenses without planning creates chaos and missed payments. 

How to Improve Credit Score for Business Loans 

Improving your credit score is possible, but it requires patience, consistency, and financial discipline. Here’s how you can do it step by step: 

• Pay all EMIs on time:
  Timely repayment is the most important factor in your credit score. Even paying just the minimum due on credit cards helps avoid negative marks on your report. 

• Control credit card usage:
  Try to use less than 30% of your total credit limit. High usage signals financial stress and pulls your score down, even if you pay on time. 

• Avoid multiple loan applications together:
  Applying for several loans at once leads to multiple credit enquiries, which can reduce your score. It’s better to apply strategically after proper guidance. 

• Check your credit report regularly:
  Sometimes reports contain errors like wrongly marked late payments or closed loans showing active. Correcting these mistakes can give your score an instant boost. 

How Long Does It Take to Improve a Credit Score? 

Small improvements can be seen in 2–3 months if payments are regular. Major improvement usually takes 6–12 months, depending on past mistakes. 

There is no overnight fix. Anyone promising instant credit score repair is usually misleading you. 

Credit Score Myths Small Business Owners Believe 

Many small business owners make financial decisions based on half-information or things they’ve heard from friends, relatives, or even local agents. Over time, these myths create unnecessary fear around credit scores and business loans. The problem is not the credit score itself, but the misunderstanding around how it actually works. Let’s clear some of the most common myths that often confuse small business owners. 

• Myth: “Credit score doesn’t matter if my business is running well.”
  Reality: Turnover and profits are important, but lenders also check your credit score. Both work together for loan approval. 

• Myth: “Checking my credit score will Lower it.” Read a full blog on this
  Reality: Checking your own credit score is completely safe and does not affect it in any way. 

• Myth: “Closing old loans improves my credit score.”
  Reality: A long and clean repayment history strengthens your credit score, so old well-managed loans are helpful. 

Understanding these myths correctly can save you from wrong decisions and help you approach business loans with more confidence and clarity. 

Final Thoughts: How TallyCapital Helps 

A business loan should help your business grow, not become a burden. 

At TallyCapital, we don’t just push loan offers. We first understand your credit profile, explain where you stand, and guide you on how to improve it if needed. Sometimes, waiting and fixing your score saves you lakhs in interest. 

Your credit score is not a problem. It’s a tool. Use it wisely, and it can open doors to better business opportunities. 

If you want the right guidance for your business loan journey, TallyCapital is here to help step by step. 

Running a business often means dealing with urgent financial needs. But traditional bank loans can be slow, paperwork-heavy, and difficult to qualify for. For many businesses, this gap between need and access to funds becomes a real growth barrier. NBFC business loans solve this problem by offering quicker approvals, simpler processes, and flexible funding options.

In this blog, we explain how NBFC loans work and why they have become a preferred choice for Indian MSME owners today.

What is an NBFC?

NBFC stands for Non-Banking Financial Company. These are financial institutions registered with the Reserve Bank of India (RBI) that provide loans, credit, and other financial services, but they are not banks.

NBFCs cannot accept savings or current account deposits like banks, but they can lend money to individuals and businesses. Over the years, NBFCs have become a strong support system for Indian entrepreneurs, shop owners, manufacturers, service providers, and startups.

For example, if a small retailer doesn’t qualify for a bank loan due to strict rules, an NBFC may still approve the loan after evaluating business performance.

How Does an NBFC Business Loan Work?

The working of an NBFC loan is simple and business friendly. First, the business owner applies for a loan online directly or through a partner platform like TallyCapital. The NBFC checks basic details like business turnover, income flow, credit history, and repayment capacity.

Unlike banks, NBFCs focus more on your business potential rather than just paperwork. Once approved, the loan amount is directly credited to your bank account quickly or sometimes within 24–72 hours. Repayment is done through monthly EMIs over a fixed tenure.

Types of NBFCs in India

NBFCs are classified based on their activities. Understanding these types helps you know what kind of lender you’re dealing with.

Asset Finance Companies (AFCs)

Provide loans against physical assets like vehicles, machinery, or equipment. Its interest rates are often lower than unsecured loans.

Investment Companies (ICs)

Primarily deal with shares and securities, mutual fund investments, Bonds and debentures

Loan Companies (LCs)

These are the most common and most relevant NBFCs for MSMEs. They focus on personal loans, business loans, and working capital finance.

Microfinance Institutions (MFIs)

Offer small-ticket loans to micro and small businesses, especially in rural and semi-urban areas. MFIs focus more on financial inclusion than large business expansion

Infrastructure Finance Companies (IFCs)

Finance large infrastructure projects, corporations and Government-backed projects such as -Roads and highways, Power plants, Ports and airports, Telecom and energy.

Key Features of NBFC Business Loans

NBFC business loans are popular because of the following features:

• Quick loan approval & disbursal
• Offers minimal documentation
• Flexible eligibility criteria
• Customized repayment options
• Suitable for low or thin credit profiles

Hidden Charges in NBFC Business Loans

However, these benefits often come with additional costs, which brings us to the most important part of this blog.

Processing Fees: NBFCs deduct 1%–3% of the loan amount upfront, so you receive less money than approved.

Documentation / Legal Charges: Extra fees may be charged for agreements, legal verification, and stamp duty without clear upfront disclosure.

Insurance Charges: Loan insurance is often added automatically even though it is optional, increasing your loan cost.

Foreclosure / Prepayment Charges: Closing the loan early can attract 2%–5% charges on the outstanding amount.

Late Payment Penalties: Missing an EMI can lead to daily penalties, extra fees, and a drop in your credit score.

EMI Bounce Charges: Each failed EMI due to low balance can cost ₹500–₹1,500 plus GST.

GST on Charges: An additional 18% GST applies on fees and penalties, quietly increasing the total repayment amount.

Documents Required for an NBFC Business Loan

One reason NBFCs are popular is their simple documentation process.

Commonly Required Documents:

• PAN Card (individual & business)
• Aadhaar Card
• Business registration proof
• Last 6–12 months bank statements
• Income proof (ITR / GST returns)
• Address proof

Requirements may vary based on loan amount and NBFC.

How TallyCapital Plays a Role Here

This is where TallyCapital makes the process smoother for business owners. TallyCapital acts as a smart bridge between businesses and trusted NBFC lenders like Flexiloans, GetVantage, Indifi, etc.

By using business data and financial insights, TallyCapital helps identify the right loan options for each business. Instead of visiting multiple lenders, business owners can explore suitable NBFC loan offers in one place.

TallyCapital focuses on transparency, speed, and clarity. From checking eligibility to understanding loan terms, it ensures that businesses take informed decisions without confusion or hidden surprises.

Conclusion

NBFC business loans have changed the way Indian businesses access finance. They offer flexibility, faster approvals, and better understanding of real business needs.

If you are a business owner looking for growth capital, working capital, or emergency funds, NBFC loans can be a smart option. With platforms like TallyCapital supporting the journey, getting the right business loan becomes easier, faster, and more reliable.

The key is to choose wisely, understand the terms clearly, and partner with a platform that puts your business first.

Taking a business loan can feel like a big relief. Most lenders advertise low interest rates, quick approvals, and minimal paperwork. But what many business owners realize later is that the loan costs much more than expected.

This is where hidden charges in business loans come into the picture.

Many entrepreneurs focus only on the interest rate and EMI amount, ignoring the fine print. Unfortunately, fine print often contains fees and penalties that increase the actual cost of borrowing.

In this blog, we will explain what hidden charges really are, break down the most common types of hidden charges in India, show you how to identify them before taking a loan and teach you how to avoid them.

By the end, you’ll be able to make smarter, safer, and more informed borrowing decisions.

What Are Hidden Charges in Business Loans?

Hidden charges are extra fees and costs that lenders charge apart from the interest rate. These charges are usually explained in complex legal terms or placed deep within the loan agreement, making them easy to miss.

Lenders include these charges to cover their costs, reduce risk, and increase profits. But the real issue is when these charges are not clearly explained to borrowers upfront.

Interest Rate vs Actual Cost

Many lenders promote loans at 10%–14% interest, but the real cost may be 18%–28% or more after adding Processing fees, GST, insurance, and penalties, the actual cost can rise to 18%–28% or more, known as the Effective Interest Rate or APR (Annual Percentage Rate).

Read Blog to Understand business loan interest rates, fees and charges.

Types of Hidden Charges in Business Loans

Let’s look at the most common hidden charges Indian business owners face.

 Processing Fees

It’s a one-time charge taken by the lender for handling your loan application. This includes:

• Reviewing your business and financial documents
• Checking your credit score and repayment history
• Assessing loan eligibility and risk
• Preparing loan agreements
• Disbursing the loan amount

In India, the processing fee for business loans is usually 1% to 3% of the sanctioned loan amount. Sometimes a fixed amount is charged for small-ticket loans and 18% is charged extra as GST.

Documentation & Legal Charges

These charges are usually hidden in the fine print of the loan agreement, can range anywhere between ₹2,000 and ₹25,000, and are more commonly seen in secured business loans.

These are fees for:

• Preparing loan agreements
• Stamp duty
• Legal verification of documents
• Registration (in some secured loans)

 Prepayment & Foreclosure Charges

Prepayment means paying part of the loan early, while foreclosure means closing the loan before its tenure ends. Many lenders charge 2%–5% of the outstanding amount for early repayment, and some restrict prepayment during the first 6–12 months. This often prevents borrowers from closing their loans early, even when funds are available.

Late Payment & Penal Interest

If you miss an EMI even by a few days, the lender may charge a late payment fee (from ₹500 to ₹2,000 for each delay), apply penal interest (2%–4% extra per month) on the overdue amount, and add GST on these penalties.

These charges make even small delays expensive, and repeated missed EMIs can seriously damage your business cash flow and negatively impact on your credit score.

GST and Other Taxes

18% of GST is applied on processing fees, penalties, and other service charges related to the loan. Borrowers often overlook taxes, which increases the final cost beyond what was initially expected.

Loan Cancellation Charges

If you cancel the loan after approval, Before or after disbursement.

• Cancellation fees may apply

• Processing fees are usually non-refundable

EMI Bounce Charges

The lender charges an EMI bounce fee. When your EMI fails due to insufficient balance or technical issues, or mandate problem, the lender charges an EMI bounce fee. Repeated EMI bounces can lead to heavy penalties and damage your business credit profile.

Insurance & Add-On Charges

Some lenders automatically include loan protection insurance, credit life insurance or business risk cover without clearly explaining them. The cost of these extras is often added to the loan amount, and interest is charged on them as well.

Ways to Find Out Hidden Charges Before Taking a Business Loan

• Read the Loan Agreement Carefully: Go through sections on fees, penalties, prepayment rules, and insurance to understand all costs mentioned in the fine print.
• Ask the Right Questions: Confirm the total repayment amount, additional charges beyond interest, insurance requirements, and penalties for prepayment or delayed EMIs before signing.
• Understand APR / Effective Interest Rate: Check the APR (Annual Percentage Rate) as it includes interest, fees, insurance, and taxes, giving you the true cost of the loan.
• Check the Loan Sanction Letter: Review the approved loan amount, fees deducted upfront, and EMI structure to avoid surprises later.
• Compare Lenders Properly: Compare banks, NBFCs, and online lenders based on transparency, total cost, and customer reviews instead of choosing in a hurry.

 How to Avoid Hidden Charges in Business Loans

• Choose transparent lenders who clearly show all charges, share a full fee breakup upfront, and explain loan terms in simple, easy-to-understand language.
•  Ask for a complete fee breakup in writing, including all fees, applicable taxes, and clarity on which charges are optional and which are mandatory.
• Avoid rushed decisions by taking enough time to compare multiple loan offers, carefully read the loan agreement, and ask questions before signing.
• Check prepayment terms in advance by understanding lock-in periods and choosing lenders that offer low or zero prepayment or foreclosure charges if you plan early repayment.
• Maintain good repayment discipline by keeping sufficient bank balance, setting auto-debit reminders, and tracking EMI due dates to avoid penalties and bounce charges.

How TallyCapital Helps

Hidden charges often arise due to lack of clarity and rushed decisions. TallyCapital solves this by bringing transparency and control to business lending. It provides:

• Complete Transparency: All interest rates, fees, taxes, and charges are shown upfront, with no surprises later.
• Data-Based Loan Offers: Loans are offered using your real financial data from Tally, reducing extra risk charges and add-ons.
• Easy Lender Comparison: Compare multiple loan offers in one place based on total cost, not just EMI.
• No Forced Add-Ons: Optional charges and insurance are clearly disclosed, so you pay only for what you choose.
• Quick, Informed Decisions: Simple explanations and a smooth process help you decide fast, without costly mistakes.

Conclusion: Borrow with Clarity, Not Surprises

Hidden charges may look small at first, but over time they can quietly increase your loan cost and affect your business cash flow. That’s why looking beyond the interest rate and understanding the total cost of borrowing is essential for every Indian business owner.

A transparent loan keeps your finances predictable, and your growth plans stress-free. With TallyCapital, you get clearer loan offers, better visibility into charges, and the confidence to make informed decisions.

Before you take your next business loan, take a moment to understand every fee. A little clarity today can make a big difference

Running a business in India often requires timely financial support. Whether it’s for managing day-to-day expenses, purchasing equipment, or expanding operations, a business loan can be a powerful growth tool. However, many entrepreneurs unknowingly make mistakes while applying for a business loan, which can result in rejection, higher interest rates, or long-term financial stress. 

Understanding these common mistakes and knowing how to avoid them can help you to secure a business loan smoothly and use it effectively.  

Common Mistakes While Applying for a Business Loan

Let’s look at the most frequent mistakes business owners make and how you can avoid them. 

Failing to Research Business Loan Providers

What’s the mistake? 

Many business owners apply for a loan without properly researching different lenders. They often choose the first bank or lender they come across or get influenced by quick approval promises without checking interest rates, loan terms, or repayment flexibility. 

Consequences 

When you fail to research loan providers, you may end up paying a much higher interest rate than necessary. You might also face hidden charges, strict repayment schedules, or poor customer support. In some cases, applying to the wrong lender can even result in outright rejection because your business profile does not match their lending criteria. 

How to avoid it (Solution) 

To avoid this mistake, take time to compare multiple lenders before applying. Look beyond just interest rates and understand processing fees, repayment tenure, and flexibility in EMIs.

Choosing TallyCapital as a transparent and reliable lending partner can help you find loan options that suit your business needs without hidden surprises. 

Not Paying Attention to Your Credit Score

What’s the mistake? 

Many business owners believe their personal credit score does not matter when applying for a business loan. This is especially common among sole proprietors and small business owners. 

Consequences 

Ignoring your credit score can significantly reduce your chances of loan approval. Even if your business is doing well, a poor personal credit score can lead to rejection or result in lenders offering loans at higher interest rates with stricter conditions. 

How to avoid it (Solution) 

Before applying for a business loan, check your credit score and ensure it is in good shape. Paying EMIs and credit card bills on time, keeping credit utilization low, and correcting any errors in your credit report can improve your score and increase lender confidence. 

Borrowing More Money Than Required

What’s the mistake? 

Some business owners apply for a higher loan than they actually need, assuming extra funds will be useful later. While this may seem like a safe approach, it often creates unnecessary financial pressure. 

Consequences 

Borrowing more than required increases your monthly EMI burden and overall interest outgo. This can affect your cash flow, making it harder to manage daily business expenses and increasing the risk of default. 

How to avoid it (Solution) 

Calculate your business requirements carefully and borrow only the amount you truly need. Planning your expenses and having a clear repayment strategy ensures the loan supports growth instead of becoming a financial burden. 

Submitting Incomplete or Incorrect Documents 

Documentation is the backbone of a business loan application. Many applications are rejected simply due to missing or incorrect paperwork. 

Common document mistakes include: 

• PAN mismatch between business and bank records 

• Missing Bank Statements 

• Unfiled income tax returns 

• Incorrect business address details 

• Outdated registration certificates 

Consequences 

Incomplete paperwork can slow down the approval process and reduce your credibility in the eyes of lenders. In some cases, repeated document issues can result in your loan application being rejected altogether. 

How to avoid it (Solution) 

Ensure all required documents are updated and consistent. Preparing these documents in advance makes the loan process faster and smoother. 

Applying for Multiple Business Loans Simultaneously

What’s the mistake? 

To increase approval chances, some business owners apply to multiple lenders at the same time without realizing the impact on their credit profile. 

Consequences 

Each loan application triggers a credit inquiry, and multiple inquiries within a short period can lower your credit score. Lenders may view this as a sign of financial distress, reducing your chances of approval. 

How to avoid it (Solution) 

Apply through a single trusted platform like TallyCapital after checking eligibility. This reduces unnecessary credit inquiries and improves your chances of approval without harming your credit score. 

Not Going Through the Terms and Conditions

What’s the mistake? 

Many borrowers focus only on the loan amount and interest rate while ignoring the detailed terms and conditions mentioned in the loan agreement. 

Consequences 

Skipping the fine print can lead to unexpected charges, penalties for late payments, or high foreclosure fees. These hidden costs can significantly increase the total cost of the loan. 

How to avoid it (Solution) 

Always read the loan agreement carefully and clarify any doubts before signing. Understanding prepayment charges, penalty clauses, and repayment terms helps you avoid unpleasant surprises later. 

Conclusion 

Applying for a business loan is a crucial financial decision that should never be rushed. By avoiding these common mistakes and taking a thoughtful approach, you can improve your chances of approval and ensure the loan truly supports your business growth. Careful planning, financial awareness, and choosing the right lending partner can make all the difference in your business journey. 

Here at TallyCapital, we offer free loan consultation before you apply for a business loan, and you will clearly get to know all loan terms, hidden charges, repayment conditions, and lender policies in simple language, so you know exactly what you’re signing up for. This way, you can choose the right loan with full clarity and no surprises later. 

FAQs

Q1. What are the most common mistakes while applying for a business loan?
Common mistakes include ignoring credit score, borrowing more than required, submitting incomplete documents, and applying to multiple lenders at once.

Q2. Does credit score matter for a business loan in India?
Yes. Both personal and business credit scores play a major role in business loan approval, especially for MSMEs and sole proprietors.

Q3. Can applying for multiple business loans affect approval?
Yes. Multiple loan applications result in multiple credit inquiries, which can reduce your credit score and lower approval chances.

Q4. Why do business loans get rejected even if the business is profitable?
Loan rejections can happen due to poor credit history, high existing EMI burden, incomplete documents, or mismatch with lender criteria.

Q5. How can I avoid business loan rejection?
Research lenders, check eligibility, maintain a healthy credit score, submit accurate documents, and borrow only what you need.

Every business in India needs financial support at some stage, whether it’s a small shop managing daily expenses, a startup planning growth, or an established business exploring new opportunities. Business loans act as a strong financial backbone, helping entrepreneurs turn their plans into reality. 

Yet, one question worries most business owners: “Am I eligible to get a business loan?” 

At TallyCapital, we know that loan eligibility can feel overwhelming. That’s why this blog explains business loan eligibility criteria in a clear, structured, and easy-to-follow way for Indian businesses. By the end of this blog, you’ll understand what lenders look for and how you can improve your chances of getting your business loan approved. 

What Is a Business Loan? 

A business loan is money borrowed from a bank or financial institution to meet business-related needs. Unlike personal loans, this money must be used only for business purposes. 

Indian businesses take business loans for many reasons: 

• Working capital requirements 
• Business expansion or diversification 
• Purchasing machinery or equipment 
• Managing cash flow gaps 
• Hiring staff or increasing inventory 

Business loans can be secured or unsecured. Secured loans require collateral, such as property or equipment. Unsecured loans do not need collateral but usually come with higher interest rates. 

If you are a Tally user, you already maintain sales, expenses, GST, etc , digitally. This financial discipline helps lenders trust your business more easily. 

Why Business Loan Eligibility Matters 

Eligibility is one of the most important parts of the loan process. It decides whether your loan will be approved, how much loan you will get, and at what interest rate. 

Many business owners apply for loans without checking eligibility. When the application gets rejected, it not only wastes time but can also affect their credit score. Multiple rejections can make future loan approvals difficult. 

Eligibility matters because: 

• It helps lenders assess repayment capacity 
• It reduces the risk of loan default 
• It determines interest rates and loan amount 
• It improves approval chances when criteria are met 

For example, a small retailer with steady sales and proper accounts has a higher chance of approval than a business with irregular income and missing records. 

Understanding eligibility before applying helps you apply smarter and with confidence. 

Factors Affecting Business Loan Eligibility 

Lenders evaluate your business using several factors. Let us look at the most important ones in simple terms. 

Business Vintage 

Business vintage means how long your business has been operating. Most lenders prefer businesses that have been running for at least 1 to 3 years. 

A business that has survived for a few years shows stability and experience. New businesses can still apply, but loan options may be limited or require additional guarantees. 

Annual Turnover 

Turnover shows how much revenue your business generates in a year. Lenders usually have a minimum turnover requirement. 

They are looking for: 

• Consistent sales overtime 
• Growth or stability in revenue 
• Genuine business transactions 

For example, a business with ₹25 lakhs annual turnover and proper records will find it easier to qualify than a business with high but irregular sales.  

Credit Score  

Credit score is one of the most important factors lenders consider while evaluating a business loan application. It reflects how responsibly credit has been managed in the past. Even if your business is doing well, a weak credit profile can negatively impact loan approval. 

Most lenders prefer a credit score of 650 or above. A higher score increases approval chances and can also reduce interest rates. 

Credit score evaluation is mainly divided into two parts: 

Personal Credit Score

The personal credit score reflects how well a business owner manages personal loans, credit cards, and repayments. Lenders use it to judge the owner’s financial discipline, especially for small businesses and proprietorships. 

Business Credit Score

The business credit score represents the credit history and repayment behavior of the business entity. It helps lenders assess the financial stability and reliability of the business while approving a business loan. 

Read the following blog to improve your credit score.

Business Type and Structure 

The structure of your business also matters. Lenders usually offer loans to: 

• Sole proprietors 
• Partnership firms 
• LLPs 
• Private limited companies 
• MSMEs 
• Self-employed professionals 

Registered and compliant businesses are viewed as more reliable. 

Cash Flow and Profitability 

Profit is important, but cash flow is equally critical. Lenders want to ensure that your business generates enough cash to repay EMIs regularly. 

They check: 

Monthly inflow and outflow: This shows how much money comes into your business and how much it goes out every month. 

Expense management: This refers to how well your business controls and records its regular costs and spending. 

Net profit margins: This indicates how much actual profit your business earns after all expenses are deducted from sales. 

A business may show profit but still struggle with cash flow. Proper cash flow tracking in Tally helps avoid this issue. 

Existing Loans and Liabilities 

If you already have multiple loans, lenders may worry about the repayment burden. 

That does not mean you cannot apply. It simply means your income and cash flow should comfortably support additional EMI payments. So, try to close unnecessary loans before applying for a new business loan. 

Bank Account Statements 

Bank statements are used to analyze: 

• Transaction volume: Indicates how active and stable your business operations are. 
• Average monthly balance: Reflects your ability to maintain sufficient funds in the account. 
• Financial discipline: Reveals how well you manage payments and banking behavior. 

Most lenders ask for 6–12 months of bank statements to assess overall financial health. 

Tip: Avoid cheque bounces and irregular transactions, as they can reduce your loan eligibility. 

Business Location and Industry Type 

Your business location and industry also affect eligibility. 

• Businesses in stable and growing industries are preferred 
• Certain high-risk industries may face stricter checks 
• Urban and semi-urban locations often get better access to loans 

That said, many lenders now support small businesses in tier-2 and tier-3 cities as well. 

Age of the Business Owner 

Most lenders have age criteria such as: 

• Minimum age: 21 years 
• Maximum age: 65 years 

This ensures the borrower remains actively involved in the business during the loan tenure. 

Who Can Apply for a Business Loan in India? 

Business loans in India are available to many types of applicants. Here is a clear overview: 

Documents Required for Business Loan Eligibility 

To assess eligibility, lenders usually ask for: 

• Identity proof (Aadhaar, PAN) 
• Business proof and registration documents 
• Address proof of business and owner (Utility bills, rental agreement, or registered lease) 
• Bank statements (6–12 months)  
• Income tax returns (2-3 years) 
• Financial statements (profit & loss statements, balance sheet) 
• GST returns (if applicable) 

Having all documents ready speeds up approval. 

But with TallyCapital, you won’t need all this paperwork. You can get loan offers based on your financial data already maintained in TallyPrime making the process faster, simpler, and hassle-free. 

 No repeated uploads. No chasing documents. Just quick, data-driven loan offers. 

How to Improve Your Business Loan Eligibility 

Here are some practical steps to increase your chances of approval: 

• Maintain proper financial records 
• File income tax and GST returns on time 
• Check your credit score regularly 
• Keep business bank transactions clean 
• Ensure consistent income growth 
• Avoid excessive debt 

Planning ahead makes a big difference. 

Why Choose TallyCapital for Business Loans? 

At TallyCapital, we specialize in business loans only. Our focus is to understand your business needs and offer suitable financing solutions with: 

• Simple eligibility criteria 
• Minimal documentation 
• Faster approval process 
• Flexible repayment options 
• Transparent terms 

We believe every business deserves access to the right financial support at the right time. To help you plan smarter, TallyCapital offers a free Business Loan Eligibility Checker that shows how much financing your business may qualify for based on your current financials, helping you make decisions confidently before applying for a loan. 

Final Thoughts 

Understanding business loan eligibility criteria is the first and most important step toward getting funding for your business. By knowing what lenders expect, you can prepare better, avoid rejections, and secure the funds you need to grow. 

Whether you’re looking to manage working capital, expand operations, or stabilize cash flow, a business loan can be a powerful tool when used wisely. 

If you’re planning to apply for a business loan, make sure your business is financially ready and compliant. And when you are, TallyCapital is here to support your growth journey. 

Need help knowing your business loan eligibility? Connect with TallyCapital and take the next step toward business success. 

FAQs – Business Loan Eligibility in India 

Can a new business apply for a business loan?
Yes, but options may be limited. New businesses usually need strong income proof or a co-applicant. 

What is the minimum credit score required?
Most lenders prefer a score of 650 or above. A higher score improves loan terms. 

Can I get a business loan without collateral?
Yes, unsecured business loans are available. However, interest rates may be higher. 

How much loan can I get based on turnover?
Loan amount depends on turnover, profits, and repayment capacity. Higher turnover usually allows higher loan amounts. 

Do GST returns affect eligibility?
Yes. Regular GST filing shows compliance and stable sales, which improves eligibility. 

Running a micro, small or medium business in India is not easy. You manage sales, staff, suppliers, GST, and cash flow often all at the same time. In between all this, credit score usually feels like a “bank problem,” not a business one. 

But the reality is different. 

Even if your business is doing well, a poor credit score can affect your chances of getting a business loan. In many cases, it leads to rejection, higher interest rates, or lower loan amounts. 

If you are already using TallyPrime, this matters even more. Your business data on Tally may be strong, but small credit score mistakes can still slow you down. 

Let’s understand the most common credit score mistakes MSME (Micro, Small and Medium Enterprise) owners make and how they directly affect business loans. 

What Is a Credit Score and Why MSMEs Should Care 

A credit score is a number that shows how responsible you are with borrowed money. Banks and NBFCs use it to decide whether they can trust you with a loan. 

In India, credit scores usually range from 300 to 900. A higher score means lower risk for the lender. 

Many MSME owners believe credit scores matter only for personal loans. That is a common misunderstanding. When you apply for a business loan, lenders often check your personal credit score, especially if your business is closely linked to you as the owner. 

A good credit score can help you get: 

• Faster business loan approvals 
• Lower interest rates 
• Higher loan eligibility 

A weak credit score does exactly the opposite, even when your business performance looks healthy. 

Common Credit Score Mistakes MSME Owners Make 

Mixing Personal and Business Finances 

This is one of the most common mistakes among MSME owners. 

Many business owners use personal credit cards or personal loans for business expenses. For example, paying suppliers through a personal card or using a personal loan to cover short-term business losses. 

When business cash flow slows down, personal repayments get delayed. That delay affects your personal credit score, which lenders check during business loan approval. 

Keeping personal and business finances separate makes your credit profile much cleaner and easier to manage. 

Missing or Delaying Loan or Credit Card Payments 

Many MSME owners think a delay of a few days will not matter. But even one delayed EMI can reduce your credit score. This usually happens during seasonal slowdowns. You may delay an EMI to manage salaries or rent first. From a lender’s point of view, this signals stress repayment. 

Repeated delays in payment make it harder to get capital or short-term business loans when you need them the most. 

Using Too Much of the Credit Limit 

Using most or all your available credit limit can damage your credit score. If you are using more than 70–80% of your credit limit, it indicates financial stress. 

For example, if your credit card limit is ₹2 lakh and you regularly use ₹1.8 lakh or more, it indicates financial pressure. Even if payments are on time, high credit usage is seen as risky behavior. 

Maintaining lower credit utilization shows better financial discipline and improves your loan eligibility over time. 

Applying for Multiple Loans at the Same Time 

When cash flow is tight, many MSME owners apply for loans everywhere like banks, NBFCs, loan apps, and online platforms. 

Each application creates a credit enquiry. Too many enquiries in a short period reduce your credit score. They also tell lenders that the business may be under financial pressure. 

Applying strategically, instead of applying everywhere, helps to protect your credit profile. 

Ignoring Credit Reports 

Many MSME owners never check their credit report, assuming it is always correct. This can be costly and affect your score. 

Sometimes errors appear in reports. A closed loan may still show as active. A paid EMI may appear overdue. Without checking, you may not even know why your business loan was rejected and these errors can unnecessarily reduce your credit score and cause loan rejection. 

So, regularly reviewing your credit report at least twice a year helps you fix such issues before they affect your plans. 

You can check your credit score on TallyCapital for free at anytime of the year.  

Closing Old Credit Accounts Too Early 

Some business owners close old credit cards or loans thinking it will improve their score. But credit history matters. Because older accounts show long credit history, stability and repayment discipline. 

Closing them suddenly can shorten your credit history and reduce your score. It means if an account is not harmful, it is often better to keep it active with minimal usage. 

Not Having Enough Credit History 

Some business owners avoid loans completely, thinking it is safer. But having no credit history can also work against you. 

If lenders have nothing to evaluate or analyze, approving a business loan becomes difficult, especially for first-time borrowers. 

Even a small loan or credit card, when managed well, helps build trust over time. 

Becoming a Loan Guarantor Without Understanding the Risk 

Many MSME owners agree to be a guarantor for someone else’s loan without thinking it through. The mistake is assuming that it won’t affect them directly. 

If the borrower misses payments, the responsibility comes to you. This impacts your credit score even though you never took the loan for yourself. Later, when you apply for a business loan, lenders see this as a risk and may reject or delay your application. 

What you should do is avoid becoming a guarantor unless it is truly necessary. Always understand the full repayment responsibility before agreeing. 

Taking Short-Term Loans Repeatedly 

Short-term loans seem helpful during cash shortages, but depending on them regularly is risky. The mistake is using these loans to manage daily business expenses instead of planning cash flow. 

Frequent short-term borrowing creates high repayment pressure and signals poor financial stability. Lenders may hesitate to offer long-term business loans when they see this pattern. 

The right approach is to plan cash flow better and use structured business loans only when they support growth, not survival. 

How These Credit Score Mistakes Affect Business Loans 

These mistakes may seem small, but their impact is serious. 

You may face: 

• Rejection of business loan applications 
• Higher interest rates than expected 
• Lower loan amounts 
• More documentation and stricter terms 

Most importantly, loan approvals get delayed when timing matters—for inventory purchases, expansion, or seasonal demand. 

For MSMEs, access to funds at the right time is critical. Credit score directly affects that access. 

How MSME Owners Can Improve Their Credit Score 

Improving your credit score does not require complex planning. It requires consistency. 

• Pay all EMIs and credit card bills on time, even during slow months. 
• Avoid mixing personal and business expenses as much as possible. 
• Use credit wisely and avoid maxing out limits. 
• Check your credit report regularly and correct errors quickly. 

Even small improvements, when done consistently, make a big difference over time. 

How TallyCapital Helps MSMEs Get Business Loans Easily 

As a Tally user, you already manage your business data digitally. This is a major advantage. 

TallyCapital uses your real business data, such as cash flow and transaction history, to understand your actual business performance. This allows lenders to look beyond just past credit score mistakes. 

With TallyCapital, MSMEs benefit from: 

• Faster loan decisions 
• Quick loan offers based on real business data 
• Better access to business loans, even when traditional lenders hesitate 

Instead of judging only on past credit behavior, TallyCapital focuses on your present business strength. 

Conclusion 

Credit score mistakes are common among MSME owners. The good news is that most of them are fixable. 

By understanding how credit scores work and improving small financial habits, you can protect your loan eligibility and reduce borrowing costs. 

If you are already using Tally, you are in a strong position. Use your business data wisely, plan loans carefully, and let TallyCapital support your business growth at every stage. 

FAQs

1. Does credit score affect business loans for MSMEs?
Yes. Most lenders check the personal credit score of MSME owners, especially for proprietorships and small businesses.

2. What is a good credit score for MSME business loans in India?
A credit score above 700 generally improves approval chances and helps secure lower interest rates.

3. Can MSMEs get business loans with a low credit score?
Yes, but options may be limited. Platforms that use business data, like cash flow and transactions, may still offer loans.

4. How often should MSME owners check their credit score?
At least twice a year, or before applying for any business loan.

5. Do delayed EMIs really impact business loan approval?
Yes. Even a single delayed EMI can negatively affect your credit score and delay or reject loan approvals.

When business owners think about taking a loan, one question almost always comes up first: “Is my credit score good enough?”

While credit score is important, it is not the same as loan eligibility; and confusing the two often leads to unrealistic expectations, unnecessary stress, or even avoidable rejections.

In India, many entrepreneurs assume that a high credit score guarantees loan approval, while a low score means their chances are over. The reality is more nuanced. Lenders do not approve loans based on a single number. They evaluate both your past credit behaviour and your current business strength before making a decision.

This is where the difference between credit score and business loan eligibility becomes critical.

In this guide, we break down what credit score really means, how loan eligibility is calculated, how the two are connected, but not interchangeable and what business owners can do to improve their chances of getting a loan approved smoothly and confidently.

What Is a Credit Score? 

A credit score is simply a number that shows how responsibly you’ve handled your credit. In India, it usually ranges from 300 to 900 and is calculated by credit bureaus like CIBIL, Experian, Equifax, and CRIF High Mark. 

Credit Score Range in India: 

While exact benchmarks vary, here is a simple way to understand it. 

• A score closer to 900 is considered very strong.
• A score above 750 is generally good.
• A score between 650 and 750 is average.
• A score below 650 may raise concerns. 

This does not mean that loans are impossible with a lower score. It only means lenders will look more closely at other factors. 

For lenders, your credit score is a quick way to assess risk. It answers one simple question: “Has this borrower repaid loans responsibly in the past?” 

A good credit score helps you: 

• Get faster loan approvals 
• Access higher loan amounts 
• Secure better interest rates 
• Build lender confidence 

What Impacts Your Credit Score? 

Your credit score shows how responsibly you handle borrowed money. For business owners, understanding what affects this score helps in improving loan approval chances. 

Repayment history has the biggest impact. Paying EMIs and credit card bills on time builds trust with lenders. Even a few missed or delayed payments can lower your score quickly. 

Credit utilization means how much of your available credit you use. If you regularly use a large portion of your credit limit, it signals financial pressure. Keeping usage low shows better control and helps your score. 

Number of active loans also matters. Having too many loans at once increases your financial burden. Lenders may see this as higher risk, even if you pay on time. 

Loan enquiries affect your score when done frequently. Applying for many loans in a short time suggests urgent credit needs, which can reduce lender confidence. 

Length of credit history shows how long you’ve been using credit. A longer history gives lenders more confidence, while a very short history may limit your score growth. 

What Is Business Loan Eligibility? 

Loan eligibility simply means how much loan your business can realistically repay at the present time. It helps lenders decide whether you qualify for a business loan and what loan can be safely given to you. Unlike a credit score, loan eligibility is not a fixed number and keeps changing as your business income, expenses, and cash flow change.  

For business loans, lenders focus more on your current business performance rather than only your past record. This includes your sales, profits, existing loans, and overall financial stability. At TallyCapital, loan eligibility is checked quickly using your business data, helping you understand your chances of approval in just a short time, without long waiting periods. 

Key Factors That Decide Business Loan Eligibility 

While credit scores are important, lenders consider many other business-related factors.

Credit Score

A good credit score helps lenders trust you, but it alone does not guarantee loan approval. It is only one part of the eligibility check.

Business Vintage

Businesses that have been running for at least 1–3 years are seen as more stable. Longer business history usually improves loan eligibility.

Business Turnover

Regular and higher turnover shows that your business earns consistently. This assures lenders that you can repay the loan on time.

Profitability

Stable profits increase lender confidence. When your business makes steady profits, lenders feel more confident about lending. Profitable businesses are considered less risky.

Cash Flow

Smooth and regular cash flow help manage EMIs easily. Lenders prefer businesses with predictable income and expenses 

Bank Statements

Healthy bank transactions reflect real business activity. Clean and active bank statements strengthen your loan eligibility.

Existing Liabilities

If you already have many ongoing loans, lenders may hesitate. Fewer liabilities mean better chances of loan approval. 

Age Factor

The borrower must be between the age of 21-65 is eligible for business loan. 

Also read – 7 Key Lending Ratios That Banks Check for Business Loans

Credit Score vs Loan Eligibility: Key Differences 

Is a Good Credit Score Enough for a Business Loan? 

No, a good credit score alone is not enough to get a business loan. It helps, but it is only one part of the decision. 

Example: 

Imagin a shop owner who has a credit score of 780. On paper, this looks excellent. However, his business income is irregular, and his bank statements show inconsistent cash flow. In this case, a lender may hesitate or even reject the loan because the repayment ability is uncertain. 

Now consider another business owner with a credit score of 680. The score is average, but her business shows steady monthly turnover, clean bank statements, and regular GST filings. This tells lenders that the business can comfortably repay the loan. As a result, the loan may still get approved. 

This is why TallyCapital look beyond just the credit score. They evaluate the complete business profile to understand the real financial strength of the business before making a lending decision. 

What If Your Credit Score Is Low? 

Many Indian MSMEs and small business owners worry about loan rejection due to low credit scores. However, a low score does not always mean “no”. 

TallyCapital helps business owners by: 

• Offering free credit reports with insights 
• Providing suggestions to improve credit scores 
• Evaluating business performance along with credit behavior  

If your business fundamentals are strong, you may still be eligible for funding. 

How to Improve Credit Score for Better Loan Eligibility 

Here are simple steps business owners can follow: 

• Pay EMIs and credit card bills on time 
• Keep credit utilization below 30–40% 
• Avoid unnecessary loan applications 
• Clear overdue payments 
• Maintain healthy bank balances 

Improving credit score gradually increases loan eligibility and reduces borrowing costs. 

How TallyCapital Simplifies Business Loans 

TallyCapital is a simple, smart, and superior financing solution for Indian businesses from the house of tally. 

What TallyCapital Offers: 

• Business loans up to ₹15 Crore 
• Term Loans, LAP, CGTSME, and Professional Loans 
• Quick eligibility checks in under a minute 
• Compare lenders and EMIs using Offer Central 
• Flexible repayment options from 12 to 84 months 
• Expert assistance throughout the loan journey  

TallyCapital acts as a business growth partner, helping entrepreneurs choose the right loan, not just any loan. 

Final Thoughts 

Understanding Credit Score vs Loan Eligibility is essential for every Indian business owner planning to take a business loan. 

• Credit scores show your past financial discipline 
• Loan eligibility reflects your present business strength 
• Both determine approval, loan amount, and interest rate 

Instead of focusing only on credit scores, business owners should strengthen overall financial health and choose the right lending platform. 

With solutions like TallyCapital, business loans become transparent, fast, and growth oriented. 

FAQs

Q1. Is credit score and loan eligibility the same?
No. Credit score reflects your past credit behaviour, while loan eligibility evaluates your current ability to repay a loan based on income, cash flow, and business performance.

Q2. What is a good credit score for a business loan in India?
A score above 750 is generally considered good, but loans can still be approved with lower scores if business fundamentals are strong.

Q3. Can I get a business loan with a low credit score?
Yes. Many lenders assess business turnover, cash flow, and bank statements along with credit score before approving a loan.

Q4. How can I improve my business loan eligibility?
Maintain steady cash flow, pay EMIs on time, reduce existing liabilities, keep credit utilisation low, and avoid frequent loan enquiries.

Q5. Which matters more for business loans – credit score or loan eligibility?
Both matter, but loan eligibility often carries more weight because it reflects your current repayment capacity.

Many Indian business owners avoid loans in the initial stages. Some don’t want the pressure of EMIs. Others feel they might get rejected due to lack of credit history or they have heard this: You need a good credit score to get a business loan. 

But what if you have never taken a loan before? Does that mean you can never build a credit score? 

This is one of the most common questions we hear at TallyCapital, especially from small business owners, traders, shopkeepers, and startups. 

So, let’s answer it clearly and honestly. 

 Yes, you can build a credit score even without taking a traditional loan. And this blog will explain how, in a simple and practical way. 

What Exactly Is a Credit Score & Why Does It Matter for Business Loans?  

Think of a credit score as your financial report card.  It’s just a number that shows how well you handle money and loans. 

In India, this score usually ranges from 300 to 900, which means the higher the score, the better. 

And that’s why lenders care about your credit score because a good score helps you get faster approval, lower interest rates, and a higher loan amount, while a low or zero score can delay approval, reduce the loan amount, or even lead to rejection. 

Ways to Build Credit Score Without Taking a Loan 

Taking a loan is not the only way to build a credit score and smart business owners can start building strong credit through credit cards, timely bill payments, and disciplined money habits even before applying for their first business loan. 

Let’s look at practical and legal methods that work in India. 

Use a Credit Card the Right Way 

A credit card is one of the easiest and safest ways to start building your credit score, especially if you don’t have any loan history. Every time you use it, the bank records your activity and shares it with credit bureaus like TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. 

If you are applying for your first credit card, start with a basic entry-level card from your bank where you already have a savings or current account. If you don’t qualify, a secured credit card against a fixed deposit is a good and low-risk option to begin your credit journey. 

Paying your credit card bill on or before the due date shows that you borrow responsibly and repay on time. When you follow this habit consistently, banks begin to trust you more, and your credit score improves gradually. 

This is why experts suggest using only 30–40% of your credit limit. Lower usage shows financial control and discipline, while heavy usage can make you look overly dependent on credit. 

Example: 

• Your credit card limit is ₹50,000. 
• Safe usage is around ₹15,000–₹20,000. 
• You spend ₹18,000 on fuel, office items, and internet bills. 
• Before the due date, you pay ₹18,000 in full. 

What happens then? 

• No interest will be charged. 
• Your credit history becomes positive. 
• Your credit score slowly goes up. 

Pay Utility and Mobile Bills on Time

Many people ignore this, but late bill payments can quietly damage your financial profile. Paying postpaid mobile bills and electricity bills on time reflects financial discipline and responsible money management. While not every bill directly increases your credit score, missing or delaying these payments can still have a negative impact on it. 

Why this matters: 

If a bill goes unpaid for long, companies may report it or send it to collections and that affects your credit score. 

Example: 

You run a small office or shop: 

• Monthly electricity bill: ₹2,500 
• Postpaid mobile bill: ₹700 

So, if you pay all your regular bills before the due date every month, it reflects financial stability, responsibility, and clean money management. This consistent discipline plays a key role when you apply for a business later.

Buy Now, Pay Later (BNPL) – Use It Carefully

BNPL is basically like a mini loan. It lets you buy something immediately and pay later in monthly instalments, usually without any upfront payment. When you repay these instalments on time, it helps create a positive credit history. 

How BNPL helps your credit: 

• Some BNPL apps report your repayment behavior to credit bureaus (TransUnion CIBIL, Experian, Equifax, and CRIF High Mark). 
• Paying every instalment on time shows you are financially disciplined. 
• This can help start or improve your credit score. 

Example: 

You buy office headphones worth ₹3,000 using BNPL. 

• You select a 3-month no-cost repayment plan. 
• You pay ₹1,000 every month on time. 

This means lenders slowly start seeing you as someone who can manage small amounts of credit responsibly. With time, these good repayment habits add positive activity to your credit profile and build trust, all without you needing to take a big loan. 

Also remember: 

• Missing even one payment can reduce your credit score. 
• Using too many BNPL apps at the same time can make you look risky to lenders. 

Become an Authorized User on Someone Else’s Credit Card

If you are new to credit, this can be a helpful shortcut. A trusted family member or business partner can add you as an authorized user on their credit card, and you don’t need to apply separately for a new credit card. Their good payment history can help you start building your own credit profile. 

Example: 

If your spouse has a credit card limit of ₹1,00,000, pays all bills on time, and adds you as an authorized user, their good credit habits can positively reflect on your credit profile, even if you rarely use the card. 

So, choose someone responsible, as missed payments can affect your credit score too. This method is often used by first-time business owners before applying for loans.

Opening a Current Account & Keep It Active

A current account doesn’t directly increase your credit score, but for businesses, it is very important. Think of it as proof that your business is real and running properly. 

Why lenders care about your current account: 

• It shows money coming in and going out regularly. 
• It proves your business is active, not just on paper. 
• It helps lenders understand whether you can repay a loan or not. 

Example: 

Let’s say you run a small trading business. 

• Your customers pay you into your current account. 
• You use the same account to pay suppliers, rent, electricity, and other business expenses. 

After 6–12 months, your bank statements will show: 

• Regular income 
• Controlled expenses 
• Stable cash flow 

So, this means, when lenders see this, they trust your business more. Even if your credit history is new or limited, clean and active current account statements can improve your chances of getting a business loan. 

Avoid Common Mistakes That Damage Credit Score 

Building credit is a slow process, but damaging it won’t take time.  

There are few mistakes you can keep in mind to avoid any repercussions.  

Missing credit card due dates
If you forget to pay a ₹2,000 card bill, the bank charges a late fee and your credit score goes down.  

Paying only minimum amount
Let’s say, your total bill is ₹10,000 but you pay only ₹500 of Minimum Amount Due. The remaining amount keeps attracting interest, and your credit score will not improve. 

Applying for many loans/cards together
If you apply for 4–5 cards or loans in one month, banks may think you are under financial pressure and see you as risky. 

Ignoring old dues
Even a small unpaid amount like ₹1,200 from the past can create problems and stop your loan from getting approved later.  

Truth:
If you keep your record clean today, getting loans and credit in the future becomes much easier. 

How Long Does It Take to Build Credit Without Loans? 

This is not instant, and that is totally normal. 

Realistic timeline: 

• 3–6 months: Credit activity starts showing 
• 6–12 months: Score becomes stable 
• 12+ months: Strong enough for business loans 

Key takeaway: Don’t rush and be consistent. Even small, good habits, done every month can make a big difference. 

Why You Should Build Credit Before Taking a Business Loan 

Think of your credit score like the foundation of a building. If the foundation is strong, everything else becomes easier. 

When your credit score is good, lenders trust you more. That means: 

• Higher chances of loan approval – fewer rejections 
• Better loan terms – lower interest and flexible repayment 
• Faster processing – less waiting and fewer follow-ups 
• Less documentation stress – fewer questions and explanations 

So, if you are planning to take a business loan in the next 6 – 12 months, the best time to start building your credit is now, even if you are not taking any loan today. 

Final Thoughts: Is It Possible? 

Yes, absolutely. 

You can build a credit score without taking a loan and it’s actually a smart move. 

Only you have to- 

• Use your credit cards carefully. 
• Paying bills on time 
• Managing your money consistently 
• Avoiding common mistakes 

Indian business owners can create a strong and clean credit profile before applying for their first business loan. 

At TallyCapital, we believe in supporting businesses at every stage, whether you’re preparing today or ready for funding tomorrow.

FAQs

Can I build a credit score without taking a loan?
Yes. Credit cards, BNPL payments, and timely bill payments can help you build a credit score even without loans.

How long does it take to build credit score without loans?
Typically, 3–6 months for activity to appear and 6–12 months for a stable score.

Does paying electricity or mobile bills improve credit score?
Timely payments show financial discipline. Missed payments can hurt your score if reported or sent to collections.

Is BNPL safe for credit score building?
Yes, if used carefully. Timely repayments help, but missed payments or overuse can reduce your score.

What is a good credit score for business loans in India?
A score above 700 is generally considered good for business loan eligibility.