How To Get A Business Loan Without Income Tax Returns (ITR)

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Want to get a Business Loan without submitting an income tax return (ITR)? Don't worry; Kotak Mahindra Bank offers Business Loans without ITR. Businesses in their initial days may need more funds to file their ITR. However, this does not stop businesses from availing a Business Loan. Various requirements are attached to this scenario, and you need to understand them before applying for a Business Loan without ITR. Different banks and financial institutions offer a Business Loan without filing an ITR, whether for a start-up, small business, MSME or working capital.

In the past few years, the demand for Business Loans has increased with the emergence of small businesses, start-ups, and MSMEs. You should apply for a Business Loan with ITR as the interest rates are lower than those without ITR. In certain situations, you may find it challenging to file an ITR, particularly if you're managing a start-up or a small business. However, with these exceptions, you can still apply for a Business Loan without an ITR.

What is ITR?

ITR stands for "Income Tax Return." It is a document that individuals or businesses file with the tax authorities to show their income, deductions, and tax liabilities. In other words, it is a way of declaring to the government how much income they have earned. Based on this information, the government calculates the taxes you owe to them.

How do you get a Business Loan without ITR?

Every business needs a financial boost to scale up or expand operations, and Business Loans can help. Here is how you can apply for a Business Loan without ITR and avoid the hassle of paperwork.

Provide GST-3B Returns

One of the most preferred ways to apply for a Business Loan without ITR is by providing GST-3B returns. They are a crucial part of India's GST compliance process. Form GSTR-3B is a monthly self-declaration companies should file to report their summarised GST liabilities for a tax period. It has details like outward supplies, inward supplies subject to reverse charge, input tax credit (ITC) claimed, and the overall tax payable. Filing this return by the 20th of the following month is compulsory for all eligible taxpayers. It helps the government monitor tax collections and ensure compliance. Failure to file this return can lead to penalties and interest charges.

Provide Detailed Bank Statements

It is the most crucial step in applying for a Business Loan without ITR. Collect all your bank statements, which provide detailed information about your account and transactions. Ensure you collect a statement from at least the last six months to one year. These statements should also cover your income, revenues, and other cash flows.

Ensure your bank statements are clear and transparent to show lenders your business is reliable and eligible for a Business Loan.

Also Read: How to get Collateral Free Loan?

Ensure A Good Credit Score:

Maintaining a good credit score says a lot about your financial character. By repaying the borrowed amount promptly, you can have a high credit score and build trust among lenders. Also, use your credit card smartly to avoid a bad credit score. Make sure to pay your bills promptly, do not be too reliant on your credit cards, avoid having outstanding debts, and regularly check your credit reports.

Opt For A Guarantor or Collateral:

A guarantor is a person who takes responsibility for paying the borrower's debt in case the borrower cannot. Collateral involves offering a valuable asset like property as security to the lending institution. When you fail to pay the loan amount, the lender claims the assets to recover the loan amount. Collateral is a security measure that can help you secure a business loan without ITR.

Look For Industry-Specific Loans:

Some loans are designed for specific industries. They are customised to meet your requirements and overcome a particular sector's challenges. These loans have different eligibility criteria, compared to which ITR may be less critical.

If you choose an industry-specific Business Loan without ITR, you must pay attention to the documentation and preparations. Approach such lenders with all the required documents and smoothly get a loan for your business.

Eligibility Criteria to Get a Business Loan without ITR

You must meet specific eligibility criteria to apply for a Business Loan from Kotak Mahindra Bank. Here are the eligibility criteria for obtaining a Business Loan without ITR.

The applicant should be a Sole Proprietor, Partnership firm, Private limited company, Trust, or LLP involved in Manufacturing, Trading, or Services.
An individual must be 25 years old when applying and 65 years old at maturity.
The applicant has been in business for the last 3 years with a minimum turnover of Rs.40 Lakh.
The business must have generated profit for a minimum of 1 year.
An individual must have a credit score of 750 or above. A higher credit score can help you get a better loan deal.

Documents Required to Apply for Business Loan without ITR

The following documents are required when applying for a Business Loan without income tax return filing:

An application duly filled and signed with attached passport-sized photographs.
Identity proof such as an Aadhaar card, PAN card and a Driving licence
Residence proof such as utility bill, Aadhaar card, etc.
Business PAN card
Certificate of incorporation of the business
Establishment of business proof and rent agreement (if required
Business and its address proof
Bank statements of the last 12 months to show your income proofs
GST 3B returns (wherever Applicable)
Loan Details

Ways to Improve Chances of a Business Loan Approval without an ITR

You can improve the chances of approval of a Business Loan with ITR by following these steps:

Maintaining a good credit score: A good credit score can help you get better loan terms. Pay your bills on time and maintain a healthy credit score.
Provide collateral or a guarantor: Providing collateral or a guarantor builds trust among lenders. The bank has the option of recovering its money in case of default.
Maintain transparency: You can get a Business Loan without ITR by communicating openly with the lenders. Explain your business situation and ask them for solutions to help it.
Keep your documents ready: Keep all your documents handy to present when asked by the bank or lender. Your eligibility is based on the documents you present.

Also Read: What is the Minimum CIBIL Score for Business Loans?

Advantages of Business Loans without ITR

Are you thinking of applying for a Business Loan without ITR? Then, you should know the benefits associated with this type of loan.

Business performance: Since all the emphasis will be on your business performance, you can portray your business's true potential and growth.
Growth of new business: Business Loans without ITR are accessible to new and small businesses. It can help them expand their business with sufficient funds.
Less documentation: You do not need income tax returns (ITR) documents to avoid the hassle of searching and downloading the previous year's ITR.
Industry-specific loans: You can apply for industry-specific loans which cater to and fulfil the needs of your start-up or small business.

Having acquired all the necessary information regarding applying for a Business Loan without ITR, you are now in a position to access a Business Loan without ITR provided by different institutions. This will enable you to expand your business, whether it's a start-up or a small or medium-sized enterprise.

Frequently Asked Questions

Is it possible to get a loan without ITR?

Yes, getting a loan without ITR is possible by choosing various alternative options. Many non-traditional banking and financial institutions provide you with Business Loans without ITR.

Can I get a loan if I don't pay income tax?

Yes, you can get a loan even if you do not pay income tax. You must provide other necessary documents, fulfil the eligibility criteria, and maintain a healthy credit score.

Who Can Apply for a Business Loan Without ITR?

Self-employed individuals, as well as businesses, can apply for a Business Loan without ITR. Here are some individuals/businesses eligible:

Small and medium-sized businesses

Self-employed professionals

Businesses with low incomes

What are the Ways to Improve the Chances of a Business Loan Approval without an ITR?

You can improve the chances of a Business Loan approval without an ITR by following these steps: