Business

Personal Loan Eligibility for Self-employed Applicants

Published on April 4, 2022

A personal loan is for every individual, but there are certain eligibility criteria that you have to meet. This is an unsecured loan as the lender won’t ask for the collateral. Your loan offer depends on your creditworthiness. But as there is no asset involved, the lender checks your monthly income and obligations to see your repayment capacity. In the case of self-employed borrowers, the lender will check their annual incomes. Read this page below and know more about personal loan eligibility for such applicants.

What Should be the Age of the Borrower as per the Personal Loan Eligibility?

For salaried, the age criteria are a minimum of 21 years and a maximum of 60 years. But this age criteria won’t apply to a self-employed applicant. For them, the minimum age for application is 25 years and the maximum age limit is 65 years. If you check the Personal Loan Eligibility of your lender, you’ll see an age difference between a salaried and self-employed applicant and this is because salaried has a stable source of income. On the other hand, self-employed borrowers may witness slack periods in their businesses due to certain market reasons. There is a maximum age limit for self-employed because the lifespan of a business is more than a job.

Income Requirements from a Self-employed Applicant

As per the Personal Loan Eligibility, a self-employed person needs to have a minimum turnover of INR 40 Lakh. And this is the requirement for a non-professional. Yes, the lender has differentiated self-employed applicants into two categories – professional and nonprofessional.

Professional Self-employed

These are qualified persons such as doctors, engineers, lawyers, etc. So, if you belong to this category, the minimum turnover of your business should be at least INR 15 Lakh. A professional self-employed person can borrow from a bank or non-banking financial institution at a lower turnover.

Nonprofessional Self-employed

Traders, contractors, commission agents, etc. will come into this category of applicants. As you can see there is not much educational background required in this type of self-employed profession. This is the reason why the lender needs a strong turnover of the business to be assured of regular loan payments.

Number of Years Spent with the Current Business

How old is your business? Personal Loan Eligibility says business stability for three years in the case of professionals and five years for non-professional self-employed applicants. Because when a business is old, there are fewer chances of it collapsing. And your business stability proves that it is doing well. To prove the same, you’re required to submit the balance sheet to the lender showing profit and loss for each financial year.

CIBIL Score of the Self-employed Applicants

A CIBIL is a three-digit number ranging from 300 to 900. Because Banks or NBFCs need to know the applicant’s history of repayment, they check their CIBIL score. And a score of 750 is ideal to borrow a personal loan. How to check the CIBIL score for a personal loan? You can check your CIBIL score online by visiting the official website of Transunion CIBIL or any other credit bureau online.

Personal Loan Eligibility for Self-employed to Apply

You can apply for a personal loan singly or jointly. Borrowing a loan jointly can help you as there will be shared risk and this could result in a personal loan lowest interest rate. To apply for a loan, you need to take care of the things discussed above. Because if you meet the Personal Loan Eligibility, the bank can approve your loan request.

The eligibility criteria for a loan may vary from lender to lender. So do check the loan eligibility before applying. This way, you can secure yourself from rejection. For a personal loan, you’ll be needing the following documents –