Are you applying for a business loan? You may come across the term “business vintage” when researching business loan eligibility requirements.
If your business is 1-2 years old, it may be difficult to get a small business loan because most formal lenders prefer to lend to older businesses. But don’t worry, we have the right lenders for you. CreditEnable’s lender partners, Flexiloans, Lendingkart, and Indifi, may offer the right loan product for your small business. Read on to learn more.
What is business vintage and why does it matter when applying for a small business loan?
Business vintage is a more formal way to determine how old your business is, meaning how long it has been operational for.
When you apply for a small business loan, lenders will also need legal proof to authenticate your business vintage. You can use any Proof of Business document, like your GST registration, Shop and Establishment License, or any legal document that has your date of registration on it to prove your business vintage. Therefore, your business vintage includes how long your business has been operational and how long it’s been registered.
For example, if you’ve been running your business for 3 years, but only just registered it with the municipal, state, or central authorities, your vintage will be calculated from the day you registered, not from the day you started operations 3 years ago.
Your business vintage is significant because it makes you eligible or ineligible for a small business loan from a formal lender. When your business has a higher vintage, lenders assume you have had more time to improve your business plan and gain experience and knowledge about your market. So, lending to your small business becomes less risky for the lender compared to a much younger business. A higher business vintage can also get you more preferable loan terms, like a longer loan repayment period or a higher loan amount.
Can I borrow from a formal lender if my business vintage is only 1-2 years?
As a young small business, you will more likely be eligible for a start-up loan or a government grant than a formal small business loan. This is because your business is still too young, and you have not had enough time to become a seasoned business owner yet.
From the perspective of a formal lender, the older a business is, the less risky lending to it may be because the business has had time to develop a solid business plan and customer and asset base.
However, you’re in luck because some lenders now lend small business loans to SMEs that have a business vintage of only 1-2 years!
CreditEnable’s lender partners, Flexiloans, Lendingkart, and Indifi offer younger SMEs, with a business vintage of at least 1 year, business loans up to Rs. 10 Lakhs. So, as long as your business is registered and meets all the other eligibility criteria, you may be able to get a small business loan from one of these lenders.
As mentioned above, lending involves risk for the lender. So, to hedge the risk and ensure you can repay the loan you borrow from them, lenders set stringent criteria on who they lend to. Flexiloans, for example, lends to small businesses with a vintage of at least 1 year if you have owned property. Other lenders use other criteria, like minimum bank account balance, minimum annual turnover, etc., when making their lending decision. But how do you know which lender to apply with? That’s where CreditEnable comes in.
Can CreditEnable help me get a small business loan if my business is at least 1-year old?
Yes, CreditEnable can help you get a small business loan up to Rs. 10 Lakh if your business vintage is at least 1 year or more.
We partner with over 25 leading lenders in India, offering our SME customers a good mix of products and loan terms. When you use our technology platform to apply for a business loan, we check your business loan eligibility by doing a soft pull of your Experian score. Our lender matching algorithms then match eligible borrowers with the most appropriate lender and loan product based on the business information and financials you share with us.
If your business is at least 1 year old and you meet the other eligibility criteria, we’ll match you with the right lender saving you the time and energy you would have otherwise spent doing market research before applying.
Since we work closely with our lender partners, we have a thorough understanding of each partners’ credit policies. So, when you apply for a small business loan using CreditEnable’s free service, we’ll support you through the entire process – from documents collection and application submission to loan contract signing – to ensure you get your business loan without any difficulty in record time.
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