If you’re running a business and considering applying for a business loan, you’ve probably asked yourself: “Is my turnover enough to qualify?” Turnover, or the total revenue your business generates, is one of the key factors lenders look at when deciding whether to approve your business loan application. This blog explores why turnover is key for business loans and how to manage it if it doesn’t meet the required level.
What is Business Turnover, and Why Does It Matter?
Business turnover is the total income your business earns from sales or services over a specific period (usually a year).
For lenders, turnover shows how much revenue your business generates and gives them an idea of how stable and reliable your business is. A healthy turnover suggests that your business is doing well and is more likely to repay the loan on time. On the other hand, low or inconsistent turnover might make lenders hesitant because it signals potential risks.
How Much Turnover Do You Really Need?
Most lenders generally expect a turnover of ₹4 lakhs per month to approve a business loan. But turnover alone isn’t enough—how you manage your current account matters just as much.
This is where many businesses need to catch up. Even if their turnover looks good on paper, issues like frequent withdrawals or a very low average bank balance can raise concerns for lenders. To avoid this:
- Maintain a stable average monthly bank balance to reflect financial discipline.
- Avoid sudden, significant fluctuations in your transactions, as these can signal instability.
A steady turnover, backed by a well-managed bank account, builds trust with lenders and improves your chances of getting the loan you need—faster and on better terms.
Steps to Assess and Improve Your Turnover
Knowing your turnover is essential, not just for business loans but for understanding your business’s financial health.
How to Assess Your Turnover:
- Add up all your revenue from sales or services over a specific period (monthly, quarterly, or yearly).
- Look for patterns. Is your turnover growing, consistent, or fluctuating? Consistent growth is a good sign for lenders.
How to Improve Your Turnover:
If your turnover isn’t where it needs to be, here are some ways to increase it:
- Add new products or services: Offer something fresh that your customers will love.
- Reach more customers: Invest in marketing or explore new markets to grow your audience.
- Review your pricing: Make sure your prices are competitive but profitable.
- Focus on peak seasons: Take advantage of busy times with promotions or discounts to boost sales.
These steps take time, but improving your turnover will strengthen your business and open more opportunities for financing.
What if Your Turnover is Below the Requirement?
If your turnover doesn’t meet the required limit, don’t worry—you still have options:
- Small loans: Look into microloans or smaller funding options designed for businesses with lower revenue.
- Government schemes: Many programs, like India’s MUDRA loans, are tailored for small businesses and startups.
- Business plan: A solid business plan with realistic growth projections can help convince lenders of your potential.
- Offer collateral: Providing assets as security can make up for lower turnover.
These alternatives can help you get the funding you need, even if your turnover isn’t as high as traditional lenders expect.
Need Help Securing a Business Loan? OPEN Capital Has Your Back
If you’re worried about meeting turnover requirements for a business loan, OPEN Capital can help. We make it easier for new and growing businesses in India to access the funds they need—without the hassle.
With collateral-free business loans of up to ₹30 lakhs, you can focus on growing your business instead of stressing about paperwork or guarantees.
Here’s why OPEN Capital works for businesses like yours:
- Simple Process: Minimal paperwork means you can apply for a business loan quickly and easily.
- 100% Online: No need to visit branches or stand in long queues—everything happens digitally, from applying to tracking your loan status.
- Flexible Funding: Whether you need a small boost or a larger amount, we offer business loans that fit your business goals.
If turnover feels like a challenge, it doesn’t have to hold you back. OPEN Capital helps you get the funding you need to keep your business moving forward.
Take the first step with OPEN Capital and grow your business with confidence!
Conclusion
Turnover is an important factor in getting a business loan, but it’s not the only thing that matters. A healthy turnover shows stability and gives lenders confidence, but if your turnover is lower than expected, there are still plenty of ways to secure financing.
Take the time to understand your business’s financial position, work on improving your turnover, and explore business loan options that fit your needs. With the right preparation, you’ll be ready to take the next step toward growing your business.
Start by assessing your turnover today—you might be closer to securing a business loan than you think!
