A good CIBIL score mean less trouble in securing a business loan, but what if you have a low or no credit score? Fortunately, there are ways to get a business loan without CIBIL, whether you are a startup founder, small business owner, or entrepreneur looking for financial support.
In this guide, we’ll explore alternative financing options, eligibility criteria, and tips to secure a loan without relying on your Credit score.
If you still don’t know what CIBIL score means, check What is CIBIL score and Why is it Important & For more insights on improving creditworthiness, check How to Boost CIBIL Score from 300 to 750.
Ways to Get a Business Loan Without CIBIL
1. Apply for Government Schemes
The Indian government offers several loan schemes for small businesses and startups that do not require a high CIBIL score.
- MUDRA Loan (Micro Units Development and Refinance Agency)
- Stand-Up India Scheme
- PMEGP (Prime Minister’s Employment Generation Programme)
- CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises)
These loans focus on business viability rather than credit score.
2. Opt for Collateral-Based Loans
Banks and NBFCs offer secured loans where collateral like property, gold, or machinery can be pledged. Since the loan is backed by assets, lenders are more flexible with credit scores.
Types of collateral that can help:
- Business assets
- Real estate properties
- Fixed deposits
- Gold
3. Choose Alternative Lenders & NBFCs
Unlike traditional banks, Non-Banking Financial Companies (NBFCs) and fintech lenders have more relaxed credit requirements.
- They assess business cash flow, revenue, and turnover rather than credit scores.
- Interest rates may be slightly higher, but approval is faster.
For an in-depth comparison of financing options, read How to Get a Personal Loan with Bad CIBIL.
4. Business Credit Cards & Overdraft Facilities
If securing a loan is difficult, business credit cards and overdraft facilities can be an alternative.
- Many banks offer business credit cards based on financial history, not CIBIL.
- Overdraft facilities allow borrowing against fixed deposits or current accounts.
5. Get a Loan Against Invoices or Inventory
- Invoice Financing: Lenders provide loans based on pending invoices from clients.
- Inventory Financing: Businesses can get loans based on stock value.
These options work well for businesses with a steady revenue stream but low credit scores.
Tips to Improve Business Loan Approval Chances
- Maintain strong business financials (profit statements, revenue reports, GST filings).
- Build relationships with banks and NBFCs.
- Apply with a co-applicant or guarantor.
- Choose lenders that focus on business performance rather than personal credit scores.
Conclusion
A low or no CIBIL score doesn’t mean you can’t get a business loan. By leveraging government schemes, collateral loans, alternative lenders, and revenue-based financing, entrepreneurs can secure the necessary funds. If you’re planning to improve your credit score in the long run, check How to Boost CIBIL Score from 300 to 750 or How to boost CIBIL score from 600 to 750 for expert tips.
