Do all directors/partners need to meet eligibility criteria for company loans?

When a company applies for a business loan, lenders typically require that all directors or partners meet certain eligibility criteria. This is because each director or partner is considered responsible for the management and financial health of the business. The eligibility checks can include creditworthiness, financial background and compliance with regulatory norms. Under Indian law, particularly Section 185 of the Companies Act, 2013, there are restrictions on granting loans to directors or entities in which directors are interested, to avoid conflicts of interest and ensure transparency in financial dealings. If these provisions are contravened, penalties can be imposed on the company and the directors involved. Therefore, it is essential for all directors or partners to meet the lender’s eligibility requirements and comply with legal guidelines before a loan is sanctioned.