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Business Loans Without ITR

Income tax returns, or ITR, have become important documents to avail of a business loan. But what about the entrepreneurs and first-time business owners who do not have any business experience filing an ITR? Well, if you’re one among them and looking for a business loan without ITR, here are the options for you.

Business Loan without ITR

Start-Up Business Loans without ITR from Banks

Most public sector banks, nationalised banks, and private sector banks offer start-up loans and working capital loans to establish new businesses. You can approach any banks that offer such kinds of loans and apply for business loans without ITR. In place of ITR, the banks might look for other income generation proofs in your bank statements or personal IT returns to evaluate your repaying capacity.Government-announced MSME loans are one of the popular loans offered by the bank. Most MSME loans are for start-ups and budding entrepreneurs, so there are high chances of getting business loans without ITR.

Business Loans without ITR from NBFCs

NBFCs, or non-banking financial institutions, are RBI-approved financial institutions that provide loans and other credit products like regular banks. However, they’re not licenced to accept deposits from the general public in the form of savings accounts, fixed deposit accounts, etc. NBFCs typically have easy lending norms and are less lenient in approving loans than regular banks. Experience businesses without ITR can try their luck with NBFCs. If you meet every other eligibility, NBFCs might approve business loans without ITR at a higher interest rate.

Government Business Loans without ITR

One of the best ways to avail of business loans without ITR is to go for government schemes launched for SMEs, MSMEs, start-ups, and new business ventures. Listed here are some of the government business loans without ITR. Eligible Public Sector Banks, NBFCs, Regional Rural Banks, MFIs, State Cooperative Banks and Urban Cooperative Banks offer these loans.

  • MUDRA Business Loans Without ITR: Micro Units Development and Refinance Agency (MUDRA) is a non-banking financial institution supporting the development and refinancing activities of micro-enterprises. MUDRA provides micro credit up to Rs.10 lakh for micro and small enterprises. MUDRA loans are provided to non-agriculture enterprises in the manufacturing, trading, and services sectors. The loan amount ranges from Rs.50,000 to Rs.10 lakh based on the business eligibility.

MUDRA currently offers loans in 3 categories – Shishu, Kishor, and Tarun.

  1. Shishu Scheme provides loans up to Rs.50,000 – To start new businesses with lesser funding.
  2. Kishor Scheme provides loans of Rs.50,001 to Rs.5 lakh for already established businesses.
  3. Tarun Scheme provides loans above Rs.5 lakh to Rs.10 lakh for business expansion and upgradation.
  • Documents Required to Apply for MUDRA Loans
    • Identity proof
    • Residence proof
    • 2 photographs
    • Business proof
    • Quotation for machinery and other equipment purchase
    • For existing businesses – Unaudited balance sheet for last 2 years or (for loans above Rs.2 lakh)
    • For new businesses – Projection for one year (for loans above Rs.2 lakh)
  • Eligibility to Apply for MUDRA Loans

Any individual above the age of 18 can apply. Eligible businesses include proprietorship firms, partnership firms, and private limited companies.

  • Stand-Up India Scheme for Business Loans without ITR: Stand Up India Scheme was launched to empower Scheduled Castes (SCs), Scheduled Tribes (STs) and Women entrepreneurs and to encourage the set up of green-field enterprises.

Under the scheme, eligible banks provide composite and working capital loans from Rs.10 lakh to Rs.1 Crore for setting up a new or greenfield enterprise in the manufacturing, services or trading sector. In 2021, the scheme was extended to allied-agriculture activities like pisciculture, beekeeping, poultry, Livestock rearing, diary, fishery, agriclinic and agribusiness centres, and food and agro-processing businesses.

About 85% of the proposed business cost would be covered by a Stand-Up India loan, while the applicant must bear the rest. The loan must be secured by providing collateral or by the guarantee of the Credit Guarantee Fund Scheme (CGFS). With a maximum moratorium of 18 months, the loan must be repaid in 7 years.

  • Eligibility to Apply for Stand-Up India Scheme
    • Applicants must be above 18 years of age
    • Must belong to SC/ST
    • Women from any community are eligible
    • For non-individual businesses, 51% of the shareholding must be held by either SC/ST and/or women entrepreneurs.
  • EXPRESS 2.0: Expeditious Process To Deliver Rapid Loan Through Automated Evaluation And Swift Sanction is a scheme to provide express sanction of term loan assistance to women entrepreneurs to establish new or greenfield units and to expand or modernise existing units in manufacturing and service sectors.

The scheme provides collateral-free loans up to Rs.1 Crore with maximum repayment tenure of 60 months. The scheme features a seamless application process, automated loan processing, 100% financing, faster approvals & disbursement, and a low processing fee. 

  • SAATH (SIDBI Assistance And Aid For Thematic Support)

Provides term loan assistance to SC/ST entrepreneurs to establish new or greenfield units or to expand or modernise existing units in manufacturing and service sectors.

Eligible borrowers include MSMEs promoted by SC/ST entrepreneurs with a minimum 51% stake. Priority to smaller units and new establishments. The scheme offers collateral-free loans from Rs.25 lakh to Rs.3 Crore.

SIDBI promises 50% of the credit guarantee fee, less processing charges, incentives for proper repayment, and zero prepayment charges. 

  • ARJANA: A Special Dispensation For Nurturing Enterprises Run By Women Entrepreneurs.

The scheme provides term loans to women entrepreneurs in manufacturing and service sectors to establish new or greenfield units and to expand or modernise existing units. Eligible borrowers include MSMEs promoted by women entrepreneurs with a minimum 51% stake. The scheme offers collateral-free loans from Rs.25 lakh to Rs.3 Crore.

  • SIDBI Make In India Soft Loan Fund For MSMEs (SMILE)

New enterprises in the manufacturing and services sector and existing businesses undergoing expansion, modernisation, and technology upgrades are eligible to get the loan. The scheme provides loans up to Rs.10 lakh for equipment finance and Rs.25 lakh for other developments. Key features of the loan include quick disbursal, competitive interest rates, and longer tenure of up to 10 years.

FAQs on Business Loans without ITR

Who are eligible for business loans without ITR?

Start-ups, new business ventures, or green field projects are eligible for business loans without any income tax returns.

Do existing businesses avail of a business loan without ITR?

It is a little difficult for existing businesses without ITR to get a business loan. However, non-banking institutions like NBFC and some private sector banks might offer this kind of loan by considering other factors.

What are the disadvantages of availing of a business loan without ITR?

Business loans without ITR might attract higher interest rates, shorter tenures, and lesser loan amounts.

What is the best way to avail of a business loan without ITR?

To get the best out of a business loan without ITR, you can pledge collateral as a guarantee for your business loan.

Which banks provide business loans without ITR?

Private banks, nationalised banks, NBFC, and RRBs, are some financial institutions that provide business loans without ITR.

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