What Is A CIBIL Score & How Does It Affect Your Business?

What Is A CIBIL Score & How Does It Affect Your Business?

When you are the owner of the business, you realise how difficult it really is to operate a business. Not only do you need to work for extended hours, but you also need to make sure that everything is functioning the way that it is supposed to. Add to all the work you do keep your business operations going; there is a problem of arranging funds for normal functioning of different business operations.

Usually, a business is supposed to generate cash from its daily operations. But in reality, it is not that easy. Sometimes urgent expenses come up, or your payments are delayed unexpectedly. But your financial requirements are not subject to your payments being realised.

In order to enjoy an excellent reputation in the market, you need to make your payments on time. In such a scenario, the best option that you can avail is a business loan. Many financial institutions are functioning in India that offer different types of business loans for various requirements of yours.

How to avail a Small Business Loan?

Business loans are offered by multiple financial lenders in India, such as banks and NBFCs, with a slight variation in the rate of interest. In general, a business loan is meant for business-related requirements only like for the purchase of machinery and raw material, payment of taxes and utility bills, etc.

With the rapid integration of technology in the financial services sector, it has become convenient for you to apply for a business loan online.

You can use the online channels to acquire detailed information regarding various lending and loan product options and then file a business loan application online itself. When you file the application for a business loan online, you enjoy the benefits of prompt processing and quick disbursals. You only need to provide the necessary KYC and financial documents. There are various online business loan lenders and marketplaces as well, where you can compare business loan products from different lenders. Also, you are suggested to apply for the one which meets your requirements in the best possible manner.

About CIBIL Score

In order to bring transparency into the process of business loan sanctions and approvals, most financial institutions consider the CIBIL as the single biggest business loan eligibility determining factor. It is the best determining factor for most lenders.

The CIBIL is nothing but your credit score determined by the CIBIL TransUnion credit bureau. This score is given out of 900 and is dependent on several factors. Ideally, lenders your CIBIL score to be at least over 600 to process your application. In case your CIBIL score is below 550, then the chances for your business loan application being rejected increase significantly.

How to Get a Business Loan with a low CIBIL Score?

If your CIBIL score is below the required threshold, there is no need to be disheartened. It does not mean that you are not eligible for a business loan. There are many lenders, online as well as offline, who offer business loans for low CIBIL score applicants as well. Following is the vital information that you need to know while applying for a business loan with the low CIBIL score:

  1. Do your Research: before you file your business loan application, make sure you check your CIBIL score online and generate your credit report. Then go through the credit report and identify any errors that might have crept in. Then raise a dispute with the CIBIL, and if your claim is found to be right, then the said entry will be removed from your report, and your score would increase significantly. You can also work towards increasing your score before you applying for a loan to improve the chances of getting the application approved.
  2. Identify the Lenders: Use the internet to find out about various lenders that offer business loans with low credit scores. Many lenders only give slight weight to the CIBIL and are willing to adjust on it if you can prove your financial strength otherwise. Also, some lenders have their credit evaluation process. When you have identified such lenders, file your application with them only.
  3. Strengthen your Case: There are other factors in addition to the CIBIL that are also considered by lenders such as your age, savings, net worth, ownership of property, investment portfolio, insurance policies, and business reputation. Make sure that all these factors are in your favour.
  4. Ask for Insurance Cover: Most lenders would be willing to overlook the low CIBIL score for a business loan if you can get an insurance cover to secure the business loan amount. But be prepared to pay an extra interest rate as the risk factor for the lender’s increase in case of the low CIBIL score.

Having a low CIBIL score is not the end of the world; you must follow these tips to strengthen your profile. In the meanwhile, work towards improving your credit score and take professional help if required for the same. A good CIBIL or credit score is key to a secure financial future.

In the view of the importance of the CIBIL score for a business loan, it is sure to affect your business in case you need a loan urgently. So, you are recommended to always ensuring that you have an excellent CIBIL score. And in case you don’t, you need to work towards increasing it. So, in case you ever require a business loan, you are in go-to-go position with worrying about your CIBIL score.


Bassein Christian Business Association (BCBA) is a movement of Christian entrepreneurs and professionals with a dream to create entrepreneurship skills for its community by pooling and harnessing resources and nurturing each other’s growth in a spirit of transparency, commitment, excellence and trust.

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