There are currently over 1.5 crore GST-registered businesses in India. While GST plays a crucial role in allowing you to comply with the tax system, you can now get an MSME loan against it to grow and expand your business. These GST MSME loans are fast, flexible and collateral-free.
If you are facing financial barriers because of a lack of collateral, a GST returns-based loan offers you a simple and accessible financing option. In this blog, we will explore what GST-based loans are, their benefits, eligibility criteria and documents required.
A GST returns-based loan is a collateral-free business loan where lenders (banks and NBFCs) check your creditworthiness primarily through GST returns. It specifically caters to the working capital and cash flow needs of your business.
The main benefit of the GST-based loan is that it offers complete flexibility to use the loan. What this means is that you can use the funds to manage cash flow, working capital, expansion, growth, equipment purchases, and other business-related expenses.
Traditional business loans require collateral and extensive documents that can slow the application and approval process. In contrast to traditional business loans, GST-based loans are unsecured, which means that they don’t require collateral. Lenders rely on GST data and business registration to evaluate your application.
This historical GST data of 6-24 months helps the lender assess business turnover, consistency, and cash flows. Since the process is digitally linked to the Goods and Services Tax Network (GSTN), lenders obtain validated information directly from the GST portal.
Running a business in India comes with the responsibility of maintaining GST registration and regular GST returns. At DMI Finance, we make this compliance work in your favour. DMI Finance business loans support the GST-registered businesses, and we use your GST filings to assess creditworthiness instead of asking for heavy collateral.
If your business has a valid GST number and regular GST filings, you can apply for a DMI Finance business loan without collateral and access the working capital you need to grow.
To qualify for a DMI Finance business loan, you need to meet simple eligibility criteria:
| Criteria | Requirement |
| Minimum Age of Applicant | 23 years |
| Minimum Annual Income | ₹3,00,000 |
| Minimum Credit Score | 700 |
| Business Age | At least 24 months in operation |
Here is the document list for a DMI Finance business loan:
GST-based underwriting is a contemporary method wherein lenders assess risk, compliance, and repayment potential by utilising GST data.
The GST-based MSME loan is largely based on the amount of turnover shown by your GST returns. The lenders use this information to predict your consistency in revenue and repayment ability. Applicants with consistent GST returns can get a higher loan amount. However, inconsistent or delayed GST returns and data can attract lower loan amounts and higher interest rates.
A GST-based business loan is usually determined as a percentage of the business turnover as evidenced by GST returns over the last 6 to 24 months. This approach enables seamless and collateral-free loans that are based on the actual financial performance of the business.
Ravi is the proprietor of a small manufacturing plant in Pune. Ravi had urgent money to buy new equipment and increase production, but did not have enough collateral to take a traditional loan. He had applied for a GST-based business loan by providing his GST returns for the last 24 months.
To determine the ability to repay, the lender examined the monthly turnover and compliance with GST by Ravi. In a few days, Ravi got an unsecured loan, which was granted mainly on his GST filings without any security or a lot of paperwork.
This loan assisted Ravi in upgrading his equipment, production and fulfilling increasing orders with ease. The experience of Ravi underscores the fact that GST-based loans can help MSMEs to get quick and hassle-free funding on the basis of their GST data.
Here is the step-by-step process to apply for a DMI Finance business loan:
Here are the tips you can follow in order to improve your chances of successful GST-based loan approval:
Despite their significance to the economy, MSMEs in India face several financial barriers, such as a big credit gap and a lack of collateral. MSMEs still have a significant credit gap of over ₹30 lakh crore, even though they contribute between 30% of India’s GDP and account for more than 40% of exports.
At DMI Finance, we bridge this gap by offering collateral-free business loans with flexible eligibility criteria. Apply for a business loan of up to ₹25 lakh to grow and expand your business without any financial barriers.
1. Can I get a business loan with just GST registration?
Yes, many lenders, including DMI Finance, offer loans to GST-registered businesses. Your GST registration and returns serve as proof of your business activity and are used to assess your creditworthiness.
2. How does GST help in getting a business loan?
GST returns show your business’s sales and turnover. Lenders, such as DMI Finance, use these details to assess your financial health. If you have regular GST filings, you can qualify for a GST-based loan without pledging any assets.
3. What are the benefits of GST-based loans from DMI Finance?
4. Do I need a minimum turnover to apply for a GST-based loan?
At DMI Finance, your GST returns should reflect an annual income of at least ₹3 Lakhs to qualify for a loan.
5. Can new businesses with GST apply for loans?
DMI Finance requires businesses to be at least 24 months old with regular GST filings. If you meet this condition, you can apply for a loan without needing to pledge property or assets.
6. Is a GST-based loan unsecured?
Yes. A GST loan is unsecured, meaning no collateral is required.
7. Does a GST-based loan impact my CIBIL score?
Yes. GST-based loans influence your CIBIL score. Consistent repayment leads to an increase in credit score, whereas default can significantly reduce it.
8. Are startups eligible for GST-based loans?
DMI Finance do not provide any loans to start a business. If a business has been in operation for at least 2 years, it can apply for a loan.
9. What is the maximum loan amount for GST-based loans?
The maximum loan amount for a business loan against GST is based on GST turnover and creditworthiness. DMI Finance offers a maximum loan of ₹25 lakhs.
10. How fast is the money disbursed?
If you are eligible and have all your GST and other records in order, with DMI Finance, you can receive the loan amount within 24 to 72 hours after approval of the loan application.
11. What does GST-based underwriting mean?
GST-based underwriting is the process of assessing a borrower’s creditworthiness using a business’s GST return data.
12. Are GST-based loans helpful in establishing credit?
Yes. Repayments on time create a record of digital credit, which increases the potential to secure loans in the future and the ability to be trusted by lenders.
