If you are to transform your business into a smashing success, you need the necessary resources in hand. One of the ways to finance your business is to borrow from your relatives or to self-finance which is not always realistic. Another way to do it is by acquiring a business loan.
The process to apply for a business loan is fairly easy and hassle-free. Nonetheless, it is essential that you get the basics right if you are to apply for a successful business loan. Small Business Loans are not that easy to obtain if things are not in place. Here are five tips that you need to know in order to improve your chances to avail a small business loan:
Process Timeline: When it comes to availing a small business loan, make sure you initiate as soon as possible. The process is time-consuming if you approach a bank. It can take up to weeks to unfold. The loan might get approved within a couple of days, but the sanctioning can take much time. One positive when deciding upon a timeline is that NBFC such as Bajaj Finance provide quick disbursement when they approve your loan, and approval takes only 24 hours. Nonetheless, you should start the process as soon as you feel there is a need for you to obtain a small business loan.
Credit History: Credit history plays a great role in sanctioning of any loan. Even if you are to apply for machinery loan for your enterprise, it is essential that your personal credit history be good. Lenders take everything into account before sanctioning the loan. Right from risk level to repayment, everything is taken into consideration. It is a stage where credit score comes into play. For a hassle-free loan approval, it is essential that your credit score must be above 750. However, there are NBFCs, who due to their flexibility consider a credit score lower than that of 750.
Prepare a blueprint: When you approach a lender, make sure to communicate your plans to them quite clearly. It is essential that you be very open to the lender you are approaching. The lenders while providing small business loans want to know about how you are looking to utilise the money.
Prepare well before time: Be prepared, be organised. Prepare ahead of time. Organisation is important when it comes to approval of small business loans. You must be able to provide lenders with the specific business data they need. Thus, it is essential that you be organised and well-prepared for any information that may be asked of you at the time of application.
Consult the experts: Hearing from people who have already been there and done that will help you get an idea of what will be required. An expert financial advisor or a current borrower will help you gain a fair idea about the proceedings. This will not just help you to understand about the process but about the repayment procedure as well. These are the five tips that you must keep in mind while you are looking to borrow a small business loan.