When applying for a business loan, you may have come across the term “business vintage”. Most lenders ask for proof of business vintage before assessing your creditworthiness and lending to you. They use your business vintage as proof of business authenticity and your ability to repay a business loan you borrow from them. Scroll down to learn what business vintage for business loans is and why it is needed to obtain business financing.
What is a business vintage?
Your business vintage indicates how long your business has been operational and since when it has been registered. For example, if your business has been operational and registered since March 2018, then your business vintage in March 2022 will be 4 years. Lenders use your business vintage as a security against the loan they give you.
The higher your business vintage is, the higher are your chances of getting a loan as your vintage is also proof of your business’s financial stability and viability. It lets lenders know that your business has steady growth, and the potential to repay the loan within a set time.
With a higher business vintage, you may also be eligible for a loan with lower ROI, longer loan tenure and maybe even a higher loan amount as long as you fulfil all the other eligibility criteria for the business loan.
What happens if the dates of starting operations and business registration are different?
Proof of business registration is essential for proving your business vintage. Your business vintage is calculated from the day your business was registered. For example, if you opened your business in 2018, but registered it in 2020, the lender will calculate your business vintage from 2020.
So, if your registration date is different from the date you started your operations, the lender will calculate your business vintage from the date you registered your business as the lender can verify this information by a legal document.
While a business that is not registered may be just as profitable compared to a business that is registered, registering your business also fulfils other eligibility criteria that lenders check for before they make their decision to lend to you. These include paying taxes, following appropriate labour laws, having the right licenses, etc. So, it is recommended you register your business as soon as your start operations to ensure you become eligible for an SME loan quicker.
What documents can I use as proof of business vintage?
Any business registration document issued by the municipal, state, or central authorities can be used to prove your business vintage to lenders. Below are some of the documents that lenders generally use to verify business vintage:
- Udyam Aadhar
- Certificate of Incorporation
- Shop Act License or Gumasta Certificate (Establishment Registration)
- GST Certificate
- Labour license
- FSSAI Registration
- Trade Licences
Does CreditEnable check my business vintage when helping me get a business loan?
Most lenders prefer to lend to businesses with a vintage of at least 2-3 years, though there are a few lenders who will lend to businesses with a business vintage is of at least 1 year if you meet all the other eligibility criteria.
CreditEnable partners with 25+ leading lenders in India to provide financing solutions to SMEs across the country. Our lender partners offer a mix of SME financing products, including unsecured business loans, secured business loans, and working capital loans, with business vintage requirements ranging from 1 to 3 years.
When you apply for a loan using our free service, we first check your eligibility for the business loan, including your business vintage, and then based on the information you share with us, we’ll match you with the right lender partner. As each lender and business loan product has its own eligibility criteria, the business vintage requirement may differ based on the loan product.
Our lender partners use your business vintage along with your credit history to assess your business’s health before making their lending decision. So, if you are in the market for business funding and have a business vintage of at least 1 year, we may be able to help you!
Business Loans. Enabled Simply.