Whenever you are ready, you can apply for a small business loan. It does not matter whether you apply for a bank loan or an NBFC business loan, you have to be aware of the need of the lenders. Knowing the needs of lenders beforehand saves both your time and your strength.
These methods will help in getting your business loan.
Create a credit score: The credit score is up to 300-900 and it tells the lender how the customer is capable of repaying the loan. This score is based on your payment history, credit card, amount taken on other loans, current loan and how long the money was taken for. Credit score is an important criterion. This allows the lenders to see how the customer manages his loan. Paying bills on time makes a good credit history. Every person gets a free credit report once every year. The applicant should also keep an eye on his credit history whether any wrong information has been entered. If something is found wrong, he can improve his credit score further by fixing it.
What is the ability to take a business loan
By fulfilling the minimum requirements of the lender, your application becomes stronger. If the applicant is not doing well in any one area while his performance is the top among others, then some lenders also give concession. Nevertheless, it is good that all the needs are met.
Minimum Criteria CIBIL score for online borrowers, how many years in business, ITR filing and annual revenue. But all the lenders remain away from the lenders whose previous record is of bankruptcy. If an applicant is applying for a bank loan, then he has to fulfil the additional requirements of the loan. Generally, the eligibility criterion of banks is so strict that it becomes difficult for the applicant to pass the loan. As such, lenders ask for strong business revenue and credit score for business loans. Apart from this, the lender should not make any default in the past. It is said that it is easy to qualify for an online loan. Online lenders have easy eligibility criteria’s and have less stringent requirements.
They also agree to give loans to startups. But it has been two years for the business. Apart from this, there is a lot of competition in the interest rates of online loans.
Submit required documents
Banks and financial institutions ask for many documents to process loan applications. These documents are:
– Income Tax Returns – Personal and Business
– balance sheet
– Income Statement
– Bank statement
– driving license
– Business Agreement
– AOA and MOA
– Business Plan
– Financial Projection
All these requirements can further delay in getting a business loan. But if you have taken a business loan from NBFC then there is no issue. Apart from this, if online money is needed immediately then online lenders are best for this. They have their own easy online application process and the requirements of documents are also less.
Prepare a business plan
All loan lenders definitely want to know how the money will be used, how the profit will come so that the loan can be repaid. They need a strong business plan, in which not only the vision and objective of the organization but also how the profit will be increased.
Business plans should include current and projected financials. Also, the cash flow of the business must be shown to meet the ongoing capital requirements. This will increase the confidence of the lender in your business and increase the chances of loan approval.
The business plan should include:
– Company Details
– Product and service details
– Industry Analysis
– Management Team
– SWOT Analysis
– Promotional, marketing and sales strategy
To qualify for a business loan, the applicant has to provide a guarantee against the loan amount. Collateral is an asset that has a value such as real estate, inventory, etc. Basically, if you fail to repay the loan, then the lender sells the property to recover its loss. At the same time, collateral is not required in NBFCs. They provide business loans without collateral. So if you keep in mind the points mentioned above, then you can easily apply for a small business loan.