Is Your Small Business Eligible for a GST Loan

April 3, 2023
Updated on

Equal access to capital has long been an impediment for small and medium-sized enterprises (SMEs) in the country. Despite the incredible potential of SMEs to generate revenue and employment opportunities, acquiring the required amount of capital at the right time has been an arduous challenge. 

Small business financing has been acknowledged as the facilitator of economic growth in India. Unsecured business loans have enabled small business owners to scale despite a plethora of challenges to growth and propel business plans. A GST loan is a type of unsecured business loan offering small business owners ample financial support. This article looks at what a GST business loan is and whether your business is eligible for it.

What is a GST Business Loan, and How Does it Function?

A GST loan is a type of unsecured business loan wherein the lender disburses the required loan amount without any security. The lender determines the credibility of a GST loan based on the GST returns filed by your enterprise. 

The audited financial accounts such as the profit and loss statement and balance sheet are duly examined, and the loan is sanctioned quickly. A GST business loan does not require the submission of any additional documents. 

A GST loan works just like any other unsecured business loan in terms of functionality. The GST is calculated on the potential future profits of small business enterprises. The lending bodies closely monitor the financial records such as the balance sheet and P&L statements before disbursal. This type of business loan considers the GST return as the primary determiner of profitability.

The Benefits of GST Loan for MSMEs

No need for security:

One of the most significant challenges SMEs face while looking for a business loan is the requirement for collateral. Most small business owners already have their assets tied up as collateral for some other loan or do not possess any assets that can be pledged as security. The usual outcome is that traditional bodies such as banks reject the loan application. With a GST loan, you need an official record of your GST returns and the required KYC documents. The loan amount is disbursed without pledging any assets.

Loan purpose:

MSME owners do not have to mention the purpose for taking a GST loan. This helps them use the acquired amount for multiple purposes such as business growth, asset purchase, working capital, renovations, and more. 

Convenient and easy:

A GST business loan is easy to acquire for small businesses filing their returns on time. The amount is disbursed quickly, and the application process is easy with minimal documentation.

Better control:

A GST loan helps small business owners control their operations better. SME owners can leverage the acquired funds for an array of business purposes.  

Grow your MSME with collateral-free business loans

The Eligibility and Documents Required for a GST Business Loan

A GST loan can be availed by private limited companies, sole proprietors, public limited companies, and partnership firms. Based on the nature of operations, credit history, and the amount of GST return, the interest rate for a GST business loan can fluctuate from one enterprise to the other. You will need the following documents to apply for a GST loan:

  • The completed GST loan application form 
  • PAN card and GST return invoice 
  • The applicant’s proof of address (Adhaar Card/ Rent Agreement/ Passport/ Voter ID/ Driver’s License)
  • Proof of business continuity (Business PAN/ GST Registration/ Trade License/ Company Incorporation Certificate)

Unsecured Business Loans by Kinara Capital

The offerings at Kinara Capital are ideal for entrepreneurs looking for a business loan to commence or expand operations with ease. We disburse collateral-free business loans from Rs 1 to 30 lakhs to small business owners based on their financial history. GST return filings are not compulsory with our advanced digital loan application, you can get collateral-free loans with minimum documentation requirements. 

Business owners can avail of a business loan in as little as 24 hours by applying through our website or the myKinara mobile application.   

So, whether your business qualifies for a GST loan or not, you can reach out to Kinara Capital to get adequate financial support.

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