Tips to improve your chances of getting a business loan
Posted: Oct 29, 2020
Getting a business loan can be a very long and tedious process. With loads of paperwork and supporting documents to be provided, more often than not, business leaders tend to push it till the last moment. To top it all off, only 26% of applications get approved by the corporate banks. So, what does one have to do to improve their chances of getting a business loan?
A Credit score is an essential part of getting a loan. There are both business and personal credit scores. If you have an existing business, then a business credit score is taken into consideration. If you want to start a new business, then your personal credit score is taken into consideration. So, any default in EMIs or in payments can lead to a negative impact on your credit score. A good credit score is considered when you have a score of 750+. It is always advised to maintain a healthy credit score, but building it needs dedication and persistence. However, there are alternatives for those who have low credit scores. FT cash is one such organisation with this option, among others.
BUILD A HEALTHY BUSINESS
Getting your business to stand is not an easy task. It takes a lot of hard work to set up and/or run a business. When it comes to approving a loan, not only does the credit score, but other factors matter too such as the gross monthly income, monthly expenses and cash flow of the business. These are some important factors that a lender keeps in mind while approving of a loan. So, to keep the cash flow good, the business should think of innovative ways to maintain the same.
CHOOSING OF FINANCIAL INSTITUTIONS
Choosing a good financial institution is also an important thing to keep in mind. There are a plethora of financial institutions which provide SME business loans but searching best out of all the institutions is a tedious job. However, the internet has made it easy for us. You can search for the best business loans with nominal eligibility criteria and documentation over the internet and you can easily compare different financial institutions and get the best option.
DETAILED LOAN PLAN
When it comes to business loans, the purpose of lending plays an important role for the lender to decide whether to approve the loan or not. There should be a proper loan plan where the loan money will be utilised. This will lead to a better relationship between the lender and the creditor. If you have a proper and detailed plan, then it will create a trust of the lender towards the creditor which can really increase the chances of getting your loan approved.
Keeping your important documents up to date helps in speedy approval of business loans and gives a good impression to the lender. The general checklist of documents you need to submit for both secured and unsecured loans are -
Three years ITR
Proof of continuation
These are some basic documents required for approval of business loans; online and offline both.
These are a few tips which you should keep in mind to improve your chances of taking a business loan. These will also improve your chances of approval of business loans. Some institutions like Ftcash allow you to have speedy loan approvals if the requirements are up to the mark.
Hi, I am Diksha Sharma. By profession a blogger & writer. Currently living in Gurugram, Haryana. I have done my bachelors in technology in Information technology. I am passionate about writing and traveling. I am pet lover & fond of music.