A loan can be very handy for business owners in testing times like today. The pandemic has changed the market and venture capitalists are not keen on investing in new businesses. There is a global slowdown and if you think that your business needs funds, consider a business loan today.
The loan can be used for multiple purposes like working capital, purchasing inventory, investing in new machinery, or business expansion. Irrespective of the purpose of borrowing, you need to be well prepared when you make an application. Here are a few tips to get a loan for business.
Prepare a plan- A well laid out business plan will be helpful in convincing the lender to grant you funds. You need to have a business plan that includes the objectives of the business, revenue generation plans, strategies to use the funds, and a repayment schedule. The lender will judge the feasibility of the business based on the past performance and revenue-generating capacity of the business. You need to have a clear road map ready to get quick loan approval.
Scout the market for lenders- After you have prepared the business plan, you need to scout the market for lenders. You can compare the interest rates offered by different lenders online and understand their eligibility criteria before you approach them. An ideal lender will be your partner in growth and you need to be very careful when choosing one. You need to choose a lender that offers a loan product that is aligned with your goals. Do not rush this step and take your time to finalize on the lender.
Compare interest rates and eligibility criteria- Each lender will have varying eligibility criteria and interest rates. When you choose a lender with a low-interest rate, you ensure that the EMI amount is low and manageable for you. Hence, when you shortlist lenders and compare them, you need to compare the rate of interest, tenure, and criteria for the loan. This might take up a lot of time but it is the first step towards getting the loan. The right lender will make the borrowing process smooth and convenient for you.
Keep documentation ready- Several loan applications are rejected due to the lack of documentation. If the documentation is not ready and in place, your application will not be processed. Make a list of all the documents that the lender will require for the loan and then proceed with the application. You might need to provide business registration documents, identity proof, KYC of the partners, ITR, bank statements, income statement and balance sheet and projected income statement and balance sheet.
Check credit score and apply- The lender will check your credit score before approving the loan application. Hence, before you apply, you need to check the score and ensure that you are eligible for the loan. The credit score shows your ability to make the repayment on time and a higher score means the lender will be happy to grant the loan.
You can make an online application for a loan for business and if everything is in place, it will be approved in no time.