One of the main reasons smaller businesses and startups fail in India is lack of funds. Even the most innovative business idea will not reap the right results if there aren’t funds available. Likewise, if a business has to grow and expand, it requires cash flow to boost operations and pay suppliers and vendors. If you are in the same boat, think of taking a Business Loan.
Many lending institutions extend business loans. However, there is an approval process, and that can often prove to cause a problem to business owners. To ensure you and your business get hassle-free Business Loan approval, there are a few things that you can do. They will help improve the chances of your business get the loan and that too in quick-time.
Pen Down a Fool-Proof Business Plan
If you are Applying for a Business Loan, it is essential you have a written business plan. A lender will want to know how you intend using the money and what benefits your business will reap from it. After all, repayment of the loan will depend on how your business performs. Hence, no bank or lender will extend the loan without a good business plan.
Some of the components that should be part of your business plan include:
- Staff salary
- Inventory purchase
- Capital expenditures
- Other expenses
- Tangible assets
- Your capital
- Future plans for the business
Enclosing a SWOT analysis can help your business plan tremendous as it shows lenders the potential the business has. Make sure you add a section on how you will negate the threats.
Write Down How You Intend Using the Money
Lenders want concrete answers, especially when it comes to business loans. Hence, be clear and precise how you want to use the money to grow your business and repay the lender. It will demonstrate to the lender that you are organized and have clear goals in your mind. As a result, it will improve your chances of Business Loan approval.
Be sure to itemize the spending so that the lender gets precise information on how you plan on using the funds. For instance, if you want the Business Loan to upgrade machinery, mention the types of machines you intend to buy and how much each one will cost. It will also help to give a reason why you are choosing these machines over others.
Ensure Your Credit Score
Banks and financial institutes will never lend money without checking your creditworthiness. Hence, ensure you and your business is worthy enough in the eyes of the lender before you apply for a Business Loan. If your personal and business credit ratings are in good stead, you have no reason to worry. However, if the credit score is less than stellar, work on improving it before you apply for the loan.
Poor or bad credit score is a sign that you are not good at repaying your debts. This is a risk that most lenders will be unwilling to take. Hence, improve your credit score, and after that, you should apply for a business loan.
Some lenders may ask pointed questions about your business and how you intend to use the money. So, make sure you are well-prepared if the need arises. Give the lender specific answers and avoid being vague. Or else, your loan application could be rejected.
Ensure you have all the necessary documents that the lender could ask for and cover your bases by preparing for questions that the lender may ask. Some of the documentation that banks will ask you for are as follows:
- Debt-to-equity ratio
- Business tax returns
- GST payment proof
- Business license
- Business bank account statement
- Details of your finances
- Your personal ITRs (in case of a small business owner)
Before you apply for the Business Loan, find out details about the loan. You can look for online Business Loans that make it easy to compare interest rates, processing fees, loan tenure, and other charges. Based on this information, you can opt for the best Business Loan for your business requirements.
The Bottom Line
It can be a little overwhelming to apply for a business loan. However, if you have the right business plan and credit score, it should not be a big hassle to get the loan. If there are shortcomings, fix them before applying for the loan. If you are still in doubt about from where to get a Business Loan, connect with MyMoneyMantra. The financial experts here will understand your requirements and help you apply for a business loan online with reputable lenders and banks. They will ensure you get attractive interest rates and the right tenure so that you can focus on growing and expanding your business rather than worrying about the EMIs.
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.