Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply

Quick Links for loans

Quick Links for Insurance

Investment

Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Back

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients
Know More
Back

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer
Know More
Menu  
 
Apply Now

Tata Capital > Blog > The 4Cs of Credit Eligibility that a Corporate Borrower must know

Circulating Capital Loan

The 4Cs of Credit Eligibility that a Corporate Borrower must know

The 4Cs of Credit Eligibility that a Corporate Borrower must know

Every business requires sufficient capital reserves to continue the smooth daily functioning of operations and aspire for steady growth and expansion. Business owners could obtain the capital needed for a company from equity, private investors, reinvesting company profits or raising debt from financial institutions like Tata Capital.

A good line of credit can help companies grow consistently in good times and aid in survival during challenging circumstances. However, borrowers must keep a few aspects in mind on credit eligibility before applying for loans to financial institutions.

Here are 4Cs of Credit Eligibility borrowers must be familiar with before submitting loan applications to lenders –

Character

One of the crucial factors lenders assess before determining eligibility is the borrower’s character. How is their financial standing? Market reputation? Repayment track record? Credit History? 

The Credit Score offers a detailed report highlighting most of these parameters. The higher your credit score, the brighter are the chances of loan approval.

A corporate borrower’s sense of integrity helps in securing a loan. If the borrower has kept his financial commitments in the past, made timely repayments, then in such cases, the chances of getting a loan sanctioned are higher.

Besides the credit scores, lenders assess market reputation, supplier relationships, market share, vintage of trade associates to understand borrowers’ qualitative aspects before determining credit eligibility.

Capital:

Financial institutions only sanction a certain percentage of a borrower’s loan requirements. 

Let us say the borrower is seeking a business loan to purchase machinery priced at Rs 50 lakhs. The lender will only disburse about 80 to 90% of the asset value, and the remaining amount, which is the down payment, has to be shelled out by the borrower.

The higher the down payment, the better are the chances of securing a loan at competitive terms from the lender. Lending institutions lay weightage on the concept of capital because it helps minimise the risk assumed by the lender.

Thus, corporate borrowers need to evaluate the amount of funds they can spare towards the down payment and be clear on the amount of loan required before approaching the lender.

Collateral:

Traditionally, loans are sanctioned against collateral. A borrower mortgages assets 50-120% of the loan value sought depending on the underlying risk in advance to seek capital from lenders. 

Businesses that apply for a loan are required to pledge, hypothecate, or lien an item of financial value, termed as collateral. Collaterals can be either movable or immovable. An example of movable collateral is a vehicle, while a house property becomes immovable collateral. Businesses may also offer financial collateral such as fixed deposits, insurance policies, share certificates, and government bonds, among others.

Collateral protects the interest of the lender in case of default on loan repayments. In such cases, the loan is settled by disposing of the collateral. The higher the value of collateral available, the higher is the credit eligibility. 

At Tata Capital, we offer secured and unsecured loans to corporate borrowers. Reach out to Team Tata Capital to know more about the diverse loan offerings and assess your eligibility.

Context:

Yet another crucial parameter that is considered by financial institutions while sanctioning a business loan is the context of the loan. What is the loan for? What is the business context? How steady or volatile is the industry? What is the viability of the business?

Factors relevant to the sector and industry in which the business unit operates are crucial deciding factors. Furthermore, loan eligibility is decided based on the purpose for which the loan is being applied. Loan eligibility is also determined basis the tenure for which the capital is required.  Access to sufficient capital is no longer a luxury and a must-have for businesses across growth stages to accelerate their reach, turnover, and market share. Evaluate your credit eligibility based on the above four parameters and reach out to experts at Tata Capital to know more about loan offerings that can help you scale your business to the next level. 

Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Useful Links and Resources

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.