Getting a business loan application approved is not just about checking a business loan EMI calculator and applying for a loan. It is also about making sure that you get the loan that you need. Here are some of the tips to consider than can make the processing of your business loan application faster.
Assure the lender of your business plan
Just as a salary slip is important for loans to salaried borrowers, the business plan is critical in the processing of a business loan. Your business plan should highlight the stability of your business and project an encouraging future cash flow in the future. Explaining how the business loan is set to be used will also be helpful in convincing the lender about the proper utility of the amount.
Maintain a good credit score
The probability of your loan getting approved is directly proportional to your credit score. Before applying for a business loan, you should confirm that your credit score is above the minimum requirement. Maintaining a good credit score means that you pay your EMIs and bills on time. You should not have faced rejection in a loan application in the recent past and not have used your credit card over and above your credit limit. Your credit score also increases if you successfully repaid loans on time in the past.
Checking business loan eligibility
The business loan eligibility may differ from lender to lender; however, it is important to confirm that you are eligible for the required amount. Therefore, before you fill the application form with a particular bank, enquire about their eligibility norms and ensure that you meet them. This could be the turnover of the business, the number of years the business has been operating, and the borrower’s minimum/maximum age.
Incomplete documentation can result in the delay or rejection of a business loan. For a full checklist, it is best to ask the lender or check their online portal. You should furnish the documents required at the time of your business loan application and clarify your doubts, if any, with the concerned person. Some of the documents typically required in a business loan application are a cover letter, collateral related documents, business plan, loan amount and usage, details of the business team, financial statements, credit history, etc.
To build the confidence of the lender, you should be able to highlight that you have a repayment strategy in place. Use a business loan EMI calculator to calculate your monthly liability and ensure that the amount doesn’t create undue pressure on your cash flow. While the investments made thanks to the funds from the business loan will improve your cash flow, you should have a repayment plan ready even with your existing cash flow.
A business loan is important for the growth and sustainability of any business. By borrowing at the right time, you increase the growth possibilities of your business. And with good preparation, you can ensure that you get the business loan on your terms.