Business health check

Look at a few ratios from last year's accounts: net profit margin, current ratio, debt to net worth, debt service coverage (DSCR), how many days customers take to pay, and sales growth. Enter your figures in the business health check above and it works these out and scores them for you, free.

Banks mainly check whether cash profit covers loan repayments (DSCR of 1.25 or more), your credit score, years of filed returns, the current ratio and how much you already owe. The lendability score above uses these same measures and shows roughly how much more you could borrow. Each lender has its own policy, so treat it as a guide.

DSCR = (net profit + interest + depreciation) divided by the year's loan repayments, principal plus interest. For example, net profit ₹12 lakh, interest ₹6 lakh and depreciation ₹4 lakh give ₹22 lakh of cash for debt. With repayments of ₹14 lakh, DSCR is 22 ÷ 14 = 1.57.

Most banks look for a debt service coverage ratio of at least 1.25, meaning the business earns ₹1.25 in cash profit for every rupee of loan repayment due. Above 1.5 is comfortable. Below 1, profits do not cover repayments.

It depends on how much cash your business earns after current loan repayments. The tool works out the extra term loan you could service while keeping DSCR at 1.25, on a five-year loan at 11%. The bank will also look at collateral, your credit score and your bank statements.

For micro and small enterprises with limits up to ₹5 crore, RBI guidelines (from the Nayak Committee) ask banks to assess working capital at least at 20% of projected annual turnover. The tool shows 20% of last year's sales as a benchmark.

Most banks look for a promoter credit score of 700 or more, and 750 and above usually gets the best rates. Below 650, approval is hard. Check your report for free once a year, correct any errors, and pay every EMI and card bill on time to raise it.

A debt to net worth (debt to equity) ratio under 2 is comfortable; above 3, most lenders get cautious. For working capital, a current ratio of about 1.33 is the classic benchmark, meaning ₹1.33 of current assets for every rupee due within a year.

Yes. Under the CGTMSE scheme, banks and eligible lenders can give micro and small enterprises loans without collateral or a third-party guarantee, now up to ₹10 crore, with the trust guaranteeing a share of the loan. Your lendability still matters: lenders check cash flow and credit history.

Non-farm micro enterprises in manufacturing, trading and services, including proprietors, can get collateral-free loans under PM MUDRA Yojana from banks, NBFCs and MFIs: Shishu up to ₹50,000, Kishor up to ₹5 lakh, Tarun up to ₹10 lakh, and Tarun Plus up to ₹20 lakh for those who have repaid a Tarun loan.

Become a private limited company, keep clean, audited accounts, and show growth, healthy gross margins and repeat customers. Reduce dependence on any one customer, build a full-time team and prepare a clear plan for how the money will be used. The investability score shows which of these to work on first.

Investors buy shares, so you need a private limited company. Beyond that they look for growth, healthy gross margins, a large market, repeat customers, a committed team and no dependence on one customer. Many good businesses are lendable but not investable, and that is fine.

Not for equity. A proprietorship cannot issue shares, and partnerships and LLPs are hard for most investors. Convert to a private limited company before you approach angels or funds. Both can borrow from banks.

No. Use the figures from last year's profit and loss account and balance sheet, or your best estimate. Leave anything blank if you don't know; the scores use what you enter and show 'Not given' for the rest.

No. Everything is calculated in your browser and saved only on this device so you can come back to it. Nothing is sent to Brydgework.

Not necessarily. The scores use the ratios banks commonly apply, but each lender has its own policy, sector limits and checks. Treat the result as a way to prepare, and fix the weak points before you apply.