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Do you own an OPC business? Are you finding it difficult to get a loan? Here is how you can get a loan for your OPC. This article will explain the definition of OPC briefly, eligibility for a business loan for OPCs, and the documents required.

What is an OPC?

The full form of OPC is one person company. It means that it is a proprietary firm that has only a single member, who is also a proprietor. Legally, OPC has a separate standing, and you can register your proprietorship company as an OPC under the Companies Act 2013.

Can an OPC apply for a business loan?

OPC can get a business loan however, for many it is not an easy task. You need to consider the possibility of getting loan application rejected multiple times. Here are some of the factors to get approval for a business loan as an OPC. This is because, from a lending institution’s perspective, you are a high-risk borrower. Therefore, you need to remember that since OPCs are high-risk borrowers for the bank, the rate of interest may be higher.

However, your chances of getting a business loan as a one person company at a low-interest rate are higher in the case you have the following:

  • Business plan: You need to have a well-though-out business plan. The bank or NBFC officials need to understand your vision and mission. Moreover, the growth plan and loan repayment plan need to be conveyed to get approval for a business loan as a one person company.
  • Credit score: One person company means that you operate the business and by yourself and there is no one else involved. As a result, the bank will check your personal credit score to verify if you are a responsible borrower.
  • Collateral: It is relatively simpler for an OPC to get a collateral business loan. You can promise property, equipment, or even inventory as collateral for a business loan.

Documents required for a business loan from OPC

Some of the common documents required for a business loan from OPC are mentioned below:

  • Duly filled application form along with passport-sized photos
  • A copy of an identity proof such as an Aadhaar card, passport, voter’s ID, etc.
  • Your company’s bank statements for the last 6-12 months.
  • The company’s Articles of Association
  • Business plan

Note: The requirement of documents varies basis on the lending institution, it is best to get an exhaustive from the lending institution.

Eligibility criteria for OPC

  • You need to be a self-employed entrepreneur or one person company owner.
  • Many banks have minimum turnover criteria. For example, a minimum annual turnover of ₹40 Lakhs is required to apply for a business loan.
  • You need to be in your current business for at least 2-3 years and should have a total business experience of 5 years.
  • You should be a citizen of India.
  • The minimum age for applying for a business loan is generally 21 years.

Note: The eligibility criteria for a business loan for one person company varies depending on the lending institution. It is best to check with your lending institution for the eligibility criteria.

Other options for obtaining funding for OPCs

If your business loan application is rejected or you do not fit the eligibility criteria for one person company business loan, then you may consider other funding options for your business.

  • Government loan schemes: The government of India encourages MSMEs and has launched multiple loan and subsidy schemes for micro companies and startups. You can find a suitable scheme for yourself and apply for the same. You can apply online for most government schemes. Another advantage of government schemes is that it is offered at the best possible interest rate.
  • Personal loan: You can get a personal loan from a bank that you can utilise for your business needs. Many banks offer pre-approved loans too. You can try to get a loan in your personal capacity.
  • Loan on credit card: If you have a business credit card, you can get a loan on your credit card too. In fact, depending on your payment history against credit card bills, many banks may offer a pre-approved loan on your credit card.
  • A loan from an NBFC and MFIs: Along with the banks, you can also explore the option of a business loan from an NBFC or MFI. Usually, NBFCs and MFIs can offer you better interest rates, quick approval, and disbursal of the loan.
  • Other ways of funding: There are other ways of funding too. For example, you can try and find an angel investor, etc., that can give your business a necessary boost.
You can also get an unsecured business loan of up to ₹50 Lakhs through Tata nexarc. The documentation required is minimal and you can get a loan offers in 5 minutes. Apply now.

Concluding remarks: Tips to get a business loan for an OPC

  • As mentioned earlier, have a robust business plan. Mention forecasted sales figures and plan to achieve them.
  • Visit multiple banks to learn about their business loan schemes. Then you can choose the best ones to apply. Apply at multiple banks to increase your chances of getting approval. Also, this will help you to choose the right loan for your business.
  • Read the eligibility criteria of each bank carefully. In case you do not fit the criteria and still apply, you might lose the processing fees.
  • Read the terms and conditions of the business loan agreement before you sign it. If you think, the rate of interest is too high, you can negotiate with the bank or NBFC.

Swati Deshpande

Swati is a passionate content writer with more than 10 years of experience crafting content for the business and manufacturing sectors, and helping MSMEs (Micro, Small and Medium Enterprises) navigate complexities in steel procurement, and business services. Her clear and informative writing empowers MSMEs to make informed decisions and thrive in the competitive landscape.