What is DSCR and why does it matter for business loans?

DSCR (Debt Service Coverage Ratio) = Net Annual Profit / Total Annual Loan Obligations (principal + interest). Banks require DSCR ≥ 1.25 to 1.5 for business loan approval. DSCR of 1.25 means your profit covers loan repayments 1.25 times — providing a safety buffer. DSCR below 1 means your business cannot cover repayments from profits and the loan will be rejected. Example: Annual profit ₹18L, annual EMI ₹12L → DSCR = 1.5 (approved). Annual profit ₹10L, annual EMI ₹12L → DSCR = 0.83 (rejected).

What documents are needed for a business loan in India?

Documents for business loan: KYC (Aadhaar, PAN of owner and business), last 3 years ITR with CA-certified balance sheet and P&L, last 12 months bank statements, GST registration and last 12 months GST returns, business registration proof (MSME certificate, shop license, partnership deed or MOA/AOA), existing loan statement if any, property documents for collateral loans. Processing time: 3–7 days for digital lenders, 7–21 days for banks.

What is the interest rate for business loans in India 2026?

Business loan interest rates in India (2026): PSU Banks (SBI, PNB) — 10.5%–13% for MSME/priority sector. Private Banks (HDFC, ICICI, Axis) — 11%–16%. NBFCs (Bajaj, Lendingkart, Flexi) — 14%–24%. Mudra loans (Shishu/Kishore/Tarun) — 8.5%–12%. Rates depend on credit score, business vintage, loan amount, and collateral. Secured loans (with property) get 2–4% lower rates than unsecured.

What is the minimum business vintage for a loan?

Minimum business vintage (years in operation) required: PSU banks (SBI, PNB) — 3 years with ITR. Private banks (HDFC, ICICI) — 2–3 years. NBFCs and fintech lenders (Lendingkart, Flexi) — 1–2 years. Mudra loans — no minimum for new businesses. Startups under 1 year can try CGTMSE-backed loans, startup India schemes, or SIDBI. Higher vintage = better rates and higher loan amounts.

What is a Mudra loan and who is eligible?

Mudra (Micro Units Development & Refinance Agency) loans are government-backed small business loans: Shishu — up to ₹50,000 for micro businesses. Kishore — ₹50,001 to ₹5 lakh for growing businesses. Tarun — ₹5 lakh to ₹10 lakh for established MSMEs. Eligible: any non-farm small business, shopkeeper, street vendor, artisan, or small manufacturer. No collateral required. Apply at any public sector bank, regional rural bank, or MFI. Interest rates from 8.5%.

✅ Free Tool — MSME & Business Loans

Business Loan Eligibility Calculator India 2026 — Check Maximum Loan on Turnover

Find the maximum business loan you can get based on annual turnover, net profit, DSCR, and existing EMIs. Compare SBI, HDFC, ICICI, and Axis Bank eligibility instantly.

Business loan eligibility rule: Banks offer 10–20% of annual turnover as unsecured business loan. DSCR must be ≥ 1.25 (Net Profit ÷ Annual Loan EMI ≥ 1.25). With collateral: up to 60–70% of property value. Example: ₹50L turnover, ₹8L profit → eligible for approx ₹5–10 lakh unsecured loan.

Business Loan (Term Loan)

Annual Business Turnover ₹50 L

₹5 L₹10 Cr

Annual Net Profit (After Tax) ₹8 L

₹0₹2 Cr

Existing Loan EMIs (Monthly) ₹0

₹0₹5 L/mo

Business Vintage years operating

Loan Settings

Loan Tenure 3 Years

1 Yr7 Yrs

Interest Rate 12%

8%24%

Collateral Available?

Maximum Eligible Business Loan

₹0

Based on turnover and DSCR

Monthly EMI: ₹0

DSCR — Debt Service Coverage Ratio 0.00

DSCR = Annual Net Profit ÷ Annual Loan EMI. Banks require ≥ 1.25

Turnover-Based Limit

—

Profit-Based Limit

—

Collateral Boost

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Vintage Multiplier

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🏦 Bank-wise Eligibility

📋 Business Loan Types in India — Quick Reference 2026

Different loan products suit different business needs. Here's a quick comparison of the most common options:

Loan Type	Max Amount	Rate	Tenure	Best For
Term Loan	Up to ₹5 Cr	10.5–16%	1–7 years	Equipment, expansion, renovation
Working Capital	Up to ₹2 Cr	11–18%	12 months (revolving)	Stock, raw material, daily operations
Mudra — Shishu	Up to ₹50,000	8.5–12%	3–5 years	Micro businesses, street vendors, artisans
Mudra — Kishore	₹50K–₹5 lakh	9–12%	3–5 years	Small businesses, growing MSMEs
Mudra — Tarun	₹5L–₹10 lakh	9.5–12%	3–7 years	Established MSMEs, service businesses
CGTMSE Loan	Up to ₹2 Cr	10–14%	Up to 10 years	No collateral, govt-backed guarantee
Overdraft / CC	Based on turnover	11–16%	Annual renewal	Flexible working capital, irregular cash flow

📖 How to Use This Calculator

Select Loan TypeTerm Loan for fixed capital needs (equipment, expansion). Working Capital for operational needs (stock, suppliers). Mudra for micro/small businesses up to ₹10 lakh.
Enter Annual Turnover & ProfitUse figures from your latest ITR or CA-certified accounts. Turnover sets the upper limit; profit determines DSCR (repayment capacity).
Add Existing EMIs & Select VintageExisting loan EMIs reduce your DSCR. Business vintage above 3 years gets higher multipliers from most banks.
Read ResultsSee maximum eligible loan, DSCR ratio, monthly EMI, and bank-wise comparison. If DSCR is below 1.25 — reduce loan amount or tenure to improve it.

✅ Why Use This Calculator

📊

DSCR Meter

Visual ratio gauge — instantly see if your profit covers the loan repayment.

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4-Bank Comparison

Side-by-side eligibility at SBI, HDFC, ICICI, and Axis with each bank's policy.

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3 Loan Types

Term loan, working capital, and Mudra with different eligibility rules for each.

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Collateral Impact

See how offering property as collateral increases your eligible loan amount.

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Vintage Factor

Business age affects eligibility — see the exact multiplier being applied.

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100% Private

No data stored or sent anywhere. Runs entirely in your browser.

❓ Business Loan — Frequently Asked Questions

How much business loan can I get on my turnover?

Banks typically offer 10–20% of annual turnover as unsecured business loan. HDFC, ICICI, and Axis Bank offer up to 30–40% for high-vintage businesses. SBI offers turnover-based limits under MSME schemes. With collateral (property), you can get 50–70% of property value regardless of turnover. Example: ₹1 Cr turnover → ₹10–20 lakh unsecured, up to ₹40–50 lakh with collateral.

What is DSCR and why does it matter?

DSCR (Debt Service Coverage Ratio) = Net Annual Profit ÷ Annual Loan Repayment (principal + interest). Banks require DSCR ≥ 1.25 to 1.5 for business loan approval. DSCR of 1.25 means your profit is 25% more than your repayment obligation — providing safety buffer. DSCR below 1 means you cannot repay from profit — loan will be rejected. To improve DSCR: reduce loan amount, extend tenure, or increase profit before applying.

What is the minimum turnover for a business loan?

Minimum annual turnover requirements: SBI (MSME loans) — ₹10 lakh. HDFC Bank — ₹40 lakh. ICICI Bank — ₹25 lakh. Axis Bank — ₹30 lakh. For Mudra loans: no minimum turnover. For unsecured fintech loans (Lendingkart, Flexiloans) — ₹12 lakh turnover with 1 year GST filing. Lower turnover businesses should target Mudra loans, CGTMSE loans, or NBFC lenders.

What documents are needed for a business loan?

Key documents: KYC (Aadhaar and PAN of owner + business), last 2–3 years ITR with CA-certified P&L and balance sheet, last 12 months bank statements, GST registration + last 12 months GSTR returns, business registration proof (MSME/Udyam certificate, shop license, partnership deed, or company incorporation documents), existing loan sanction letters and statements. Processing time: 24 hours for digital NBFCs, 3–7 days for private banks, 7–21 days for PSU banks.

Is a Mudra loan good for small businesses?

Yes — Mudra loans are excellent for small businesses. Key benefits: No collateral required. Interest rates 8.5–12% (lower than most private loans). Government-backed so easier approval. Available at all PSU banks, regional rural banks, and MFIs. Three tiers: Shishu (up to ₹50K), Kishore (₹50K–₹5L), Tarun (₹5L–₹10L). Ideal for: shopkeepers, street vendors, artisans, small manufacturers, service providers. Apply at nearest SBI, PNB, Bank of Baroda, or NABARD-linked bank.

How to improve business loan eligibility?

Ways to improve business loan eligibility: (1) File ITR consistently for 3+ years showing growing turnover and profit. (2) Maintain clean GST filing — regular GSTR-1 and GSTR-3B. (3) Keep business bank account active with regular turnover. (4) Close existing loans before applying — improves DSCR. (5) Get Udyam registration (MSME certificate) — opens government loan schemes. (6) Maintain CIBIL score above 700 (business + personal). (7) Offer collateral if available — significantly increases eligible amount.

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